Insurance is an inevitable life element of a person or company entity that prioritises personal and business interests. It provides financial protection or reimbursement against losses from an insurance company. But beyond that, it’s simply an act of love to have insurance.
Statistics revealed that general insurance has the highest premium value or total paid coverage among the types of insurance. Categorically, business insurance is a form of general insurance. That’s about the definition of Australian Accounting Standards, which states that any insurance not determined to be life insurance is general insurance.
Here are some answers to your questions to know more about business insurance.
What type of business insurance is required by law?
The business ecosystem of Australia is becoming more and more complex. Hence, it needs to be regulated painstakingly.
A company should have three mandatory insurances: workers’ compensation, public liability, and professional indemnity. These coverages have different purposes and don’t necessarily obligate you to cover all as long as it’s not within your realm of interest.
In particular, here are some specificities of these mandatory insurance policies regarding their respective corporate usage.
What is a workers’ compensation?
This one covers all businesses with employees, particularly anything that concerns their overall safety and health in the workplace. (e.g., paid wages during temporary disability, medical expenses, and rehabilitation).
What is public liability insurance?
If you’re in the trade career industry, you will follow a tort law known as “Duty of Care.” This law obligates you to maintain prudence and good faith in protecting anyone’s safety.
For a detailed breakdown, click here.
What is a professional indemnity?
If PL Insurance covers physical safety risks, this one is quite the opposite. When you talk about this cover, it’s all about intellectual property and litigation claims.
Examples of professionals who need it are accountants, auditors, estate agents, financial advisors, consultants, etc.
Do small businesses need business insurance?
To answer your small business insurance FAQ, here is one important detail you must know.
The Australian Bureau of Statistics defines a small business in three categories:
- Non-employing: zero employees.
- Micro-business: one to four employees.
- Other small companies have five to 19 employees.
As a call back to the worker’s compensation insurance, yes as per legal requirements.
For non-employing sole proprietors or partnerships, it’s still necessary to get public liability insurance, especially if you’re a sole trader.
Why do I need business insurance?
This question is often asked in any business insurance FAQ, and you’re probably getting the same answer as” to protect your company from backfires.”
However, more than that, this insurance is your way of acknowledging foreseeable company flaws. It’s also a means of recognising that, one way or another, you’ll make fatal mistakes because of so much uncertainty.
Insurance policies, in this context, will help your company build substantial goodwill and public relations. These significant outcomes will have an impact on your credibility and attractiveness to talent in the future. Any company that values its stakeholders and goes beyond those horizons is trustworthy and prudent to the public.