What am I responsible for as a business owner?

There are countless circumstances that may have a negative effect on your business, many of which are impossible to predict. The good news is that it is possible to prepare for any eventuality, thereby safeguarding your business from potential financial ruin. The best way to do this is with the right business insurance.

However, as a business owner, what specific types of business insurance are you responsible for? What insurance are you required to have by law? Furthermore, which types of insurance are worthwhile considering despite not being mandatory? Let’s find out.

Workers’ compensation

If your business has any employees, then workers’ compensation is a must. Essentially, it is a type of accident insurance paid for by employers which provides coverage should an employee be injured on the job. The insurance will pay for medical-related costs and will provide wage-loss compensation in the event that the employee is unable to work for a period of time following the accident/injury. Workers’ compensation also applies to circumstances when an employee contracts a work-related illness. Workers’ compensation is solely the employer’s responsibility – there are no deductions made from the employees’ salaries in order to pay for it.

Public liability insurance

Public liability insurance, although mostly optional, is required by law for certain types of businesses in Australia. In essence, it protects your business from financial ruin should you or your employees ever be accused of negligence. It may offer cover in the following situations:

  • injury or death
  • providing negligent advice
  • property damage
  • consequential loss, which occurs in very rare cases where a negligent act causes a third party business to lose expected revenue.

Third party personal injury insurance

This type of insurance is required by law, but only if you own a motor vehicle or a business vehicle. Many business owners will be pleased to discover that third party personal injury insurance is often included in their vehicle registration fee. Ultimately, it provides cover for any costs relating to injuries that a motorist may cause to others in a motor vehicle crash anywhere in Australia. Most third party personal injury insurance will cover treatment, care and support of the injured parties, pay for claims management expenses, and settle worries regarding both past and future economic loss in relation to the injury.

In order to remain compliant, all Australian business owners must make sure that they have invested in the right insurance as per the law. Remember, however, while there are specific types of business insurance that every employer is responsible for, there are many other types that are not mandatory, but that can greatly benefit your establishment in the long run including professional indemnity insurance, cyber liability insurance and stock and asset insurance. It is worthwhile to consider all of these types of insurance if you are in search of total peace of mind that your business is properly protected and ready to face any challenge that may come its way.

The insurance implications of working from home

Australians are increasingly working from home, with the most recent data from the Australian Bureau of Statistics indicating at least a third of us choose to work from home at least part of the time.

study by future trends research house McCrindle shows there are lots of different reasons why people work from home. In total, 45 per cent of Australians want the flexibility to juggle other things while working, while 25 per cent of us want a better work/life balance. Additionally, 15 per cent want to work without distractions and 12 per cent want the freedom to also look after children while working.

There are also many different models when it comes to working from home. Some people run their own businesses. Others have negotiated to work from home with an employer part-time. Another group works for an employer full time from their home.

Whichever model someone falls under, there are lots of different insurance implications when people choose to work from home. Here, Michael White, who is Steadfast’s broker technical manager, explains what some of those are.

“Home and contents policies do provide some cover for people who work from home, although it’s usually limited to the assets you’re using to do the work. Usually, a computer is the main asset and this is typically covered by your home policy, with a limit of about $10,000,” he explains.

As a result, it’s important to make sure the cover limit in your insurance policy on the assets you use to conduct work from home is adequate.

Says White: “In contrast to a commercial insurance policy, which may be negotiated, this is not the case with home and contents policies, whose limits cannot be negotiated.”

For instance, if your insurer provides cover for a home computer with a value of up to $10,000, you won’t necessarily be able to negotiate for a higher cover level of, say $20,000, even if you have business assets to this value. This has implications for businesses that operate a business with a higher value of assets from their home.

Let’s says someone is running a hairdressing salon from the basement of their home. The home and contents insurance policy won’t necessarily provide cover for expensive equipment such as chairs and basins above the limits specified in the policy. If this is the case, the business owner may look into buying a business pack insurance policy, which may provide more comprehensive cover.

Also, while they include limited cover for the tools of the trade, home and contents insurance policies won’t cover personal and professional liability.

“So, if people are operating a business from home, they need to take out a separate liability cover for that business,” White explains.

In general, White stresses it’s essential to first ensure if you’re working at home, you do have a home and contents policy that will provide cover for assets such as the computer on which you conduct the business.

In addition to that you need to make sure you’ve got liability cover. This will provide protection in the event that, for instance, a courier delivers a document to your home and trips and has an accident while making the delivery.

Important note – This article is provided by Steadfast.

The information provided here is general advice only and has been prepared without taking in account your objectives, financial situation or needs. Steadfast Group Ltd (ABN 98 073 659 677, AFSL 254928)

Telematics continues to evolve in insurance

Telematics technology has proven benefits when it comes to encouraging more responsible driving, with research indicating better driver behaviour is one of the main advantages in using this innovation.

Black box or telematics technology is a way for businesses to collect data on how their employees are using company vehicles. Using telematics, businesses can collect information such as whether drivers are speeding or driving dangerously, as well as how long they spend on the road. This is important, as research indicates driver fatigue is one of the main causes of road accidents.

According to the most recent Telematics Benchmark report, improved driver behaviour, peace of mind and regulatory benefits are some of main pluses to using telematics. The research found when drivers use telematics devices, businesses achieve peace of mind knowing where their vehicles are on the road and can also plot more efficient routes, leading to reduced costs such as lower fuel bills.

Importantly, data shows businesses that use telematics can improve the safe driving record of their vehicles. Mercurien Insurance specialises in providing insurance to businesses that use tools such as telematics to manage their fleet of vehicles. One of its clients, a not-for-profit organisation with a vehicle fleet, saw speeding events per kilometre drop from 0.14 to 0.07 across two-and-a-half years. Additionally, at fault claims fell from just over 60 to just over 20 a year thanks to telematics.

As this shows, businesses that use telematics may experience a commensurate improvement in driver safety. As a result, some insurers look favourably on businesses that employ telematics in their vehicles.

Businesses collect the data and may provide it to some insurers, who then use it to make decisions on the policy and its conditions. Insurers may approve more favourable policies, including more cost-effective premiums, based on data showing better driver safety.

Turning to the public sector, the National Transport Commission is reviewing how telematics is used across the transport industry, especially among vehicles that are required to comply with the Heavy Vehicle National Law, as well as vehicles that are required by law to use telematics, such as taxis and buses.

Michael White, Steadfast’s Broker Technical Manager, explains telematics may be used by businesses to better manage how their fleets are operated and to also provide this information to their insurer.

“In the case of heavy motor vehicles, telematics can provide information on how the vehicle is being driven, speeds, how brakes are used and whether drivers comply with road rules,” he says.

Zurich Motor Fleet Underwriting and Risk Engineering is one insurer that has a telematics-based insurance policy. Zurich Fleet Intelligence (ZFI) uses telematics data gathered from its policyholders vehicles through black box technology. Subsequently, Zurich uses this information when assessing insurance policy applications and claims.

Often, Zurich’s clients already have devices in place in vehicles so they can monitor vehicles for logistics purposes. ZFI can draw on this data to assess how individual drivers behave when they are on the road. The technology also provides information to drivers about their driving performance, online and in real time.

However, another insurer, QBE, has exited the market, closing its Insurance Box product it launched in 2014. This technology provided people with a Drive Score and helped them become better drivers, by providing feedback on driving habits and tips on how to improve driving performance. It was the first product of its kind in Australia but will no longer be offered as a standalone product.

Despite QBE streamlining its telematics offering, this technology is likely to become more popular with insurers, businesses and regulators as it becomes more sophisticated over time.

Important note – This article is provided by Steadfast.

The information provided here is general advice only and has been prepared without taking in account your objectives, financial situation or needs. Steadfast Group Ltd (ABN 98 073 659 677, AFSL 254928)

What is Volunteer Insurance?

Whether you run a charity, a not-for-profit, or regular live events, volunteer insurance exists to protect both you and the volunteers that work for you. From music festival ticket collectors to ongoing charity work, volunteers are often the most important part of your organisation, and they need to be protected from accidents. Volunteer Insurance will cover them for personal accidents, and they and your organisation will be at a serious disadvantage if you do not have the right coverage in place. If you want to attract the right volunteers and keep your vital volunteers safe and confident, this specific insurance is going to be an essential requirement.

Who Needs It

Many types of organisations will need to have the right volunteer insurance policy in place.  Community groups, charities that provide healthcare for the elderly or disadvantaged, religious organisations, recreation clubs, and any charity or organisation that runs events, all make use of volunteers. These workers will not be covered by a standard business insurance policy, as they are distinctly different from salaried employees. Volunteer insurance policies protect the volunteer, but they also protect the organisation from public liability claims caused by the volunteers.

Did you know?

  • There are an estimated one billion volunteer workers worldwide, and Australia has just under six million of them. (Volunteering Australia)
  • The Australian economy receives approximately $290 billion from the work carried out by volunteers. (Pro Bono Australia)
  • According to the 2016 census by the Australian Bureau of Statistics, the largest volunteering demographic for men is those aged between 45-54. Women make up the largest numbers, with females aged 35-44 amounting to just under 400,000 volunteers. (Australian Bureau of Statistics)

What does it cover?

Employee insurance is very different from volunteer insurance, and you need to be aware of the protection that you are missing out on if your community group, non-profit, church, or charity makes use of volunteers. Volunteer insurance coverage means that you will get protection for:

Personal accidents: If a volunteer is injured while being involved in authorised volunteer activity, they will get protection and may receive weekly payments until they have recovered. This protects volunteers who are engaged in other work, as they may lose out on regular wages if they are injured while volunteering. It can even cover expenses caused by the accident and medical expenses.

Public liability: A well-tailored volunteer policy will also cover public liability. This type of policy will have a broader goal, and will offer protection for the organisation, any paid employees, and volunteers in cases of third-party personal injury or property damage. Not all volunteer policies will include public liability, so you need to confirm your coverage with your provider.

Voluntary Boards: If you have directors and board members that are categorised as volunteers, then you may want to include Professional Indemnity Liability. This will protect directors and officers from negligence by volunteers, defamation, slander, and sexual harassment. This is not usually included with a standard volunteer insurance policy, but may be a valuable addition if you make use of high-ranking professional volunteers.

What you need to know about landlord insurance

If you’ve scrimped and saved in the hopes of achieving financial security through an investment property it makes sense to insure such a valuable asset.

It’s no secret that Australians are among the most real-estate obsessed people in the world.

Around two million Australians own an investment property. A disproportionate number of these people have their own business. They are typically hoping to set themselves up financially through what they see as a safe, easy to understand investment (and perhaps reduce their tax through negative gearing).

Buying property might be less complicated than attempting to play the stock market, but all investments have the potential to end in tears. Ian Mabbutt, the Head of Personal Lines at Steadfast Underwriting Agencies, explains why it’s a good idea for investment property owners to make sure they have the right landlord insurance.

What is landlord insurance?
“Landlord insurance is the home and contents insurance you take out on a property you own but rent out rather than live in,” Ian says. “It’s a policy that will cover you for most things – public liability, storm damage, fire, theft and so on. That noted, these policies don’t cover wear and tear. Also, if owners want to be covered for loss of rental income they need to choose – and pay extra for – the rent-cover option. Loss of rental income is the biggest issue owners face but rent cover isn’t standard on landlord insurance policies.”

Read the full Steadfast article here.

How to minimise being underinsured

Many Australians, especially those who own businesses, discover they don’t have the cover they need in the worst possible circumstances.

Insurance is one of those subjects that many people glaze over. So, just to test how knowledgeable you are about this important but unsexy topic, see how many of the following you can answer.

Questions

  1. What type of insurance can provide cover if a natural disaster results in my business having to shut down for a period of time?
  2. What type of insurance can provide cover if a client takes legal action against me? In what industries is it mandatory to have this insurance?
  3. What type of insurance can provide a payout to cover costs relating to everything from a broken window to a tax audit to a light-fingered employee?
  4. What type of insurance is legally required if you employ staff? What is the penalty for failing to take out this insurance?

Answers:

  1. Business interruption insurance.
  2. Professional liability insurance (also called professional indemnity insurance). Those working in the medical, accounting, law and financial advice industries.
  3. Business insurance.
  4. Workers’ compensation insurance. It varies from state to state but you’ll typically be at risk of jail time if an employee has been injured (or worse). NSW imposes a ‘double avoided penalty’ equivalent to double the amount you should have paid in workers’ compensation premiums.

One in ten businesses have no cover

If you failed to get all (or any) of the answers right, you can take solace in being a typical Aussie. Survey after survey has shown that Australians don’t have a good grasp on what insurance policies might be relevant to them. Unsurprisingly, Australia is one of the most underinsured nations in the developed world (underinsurance is when an individual or business has no or inadequate insurance to cover their legal liabilities, or the cost of loss or damage to their assets).

The Insurance Council of Australia’s 2015 report on non-insurance in the SME sector showed a non-insurance rate of 12.8 per cent. Paul Nielsen, director and chair of the Council of Small Business Australia (COSBOA), says many SMEs are in denial. “Business owners tend to think it won’t happen to them. Because of this, some SMEs view insurance as dead money,” he says.

Read the full Steadfast article here.