Business Insurance policies, commonly known as Business Package insurance, became popular in the Australian insurance market in the 1980’s.
Prior to this time, it was common to take separate policies for individual risks in a business. For example, you would have a separate policy for Fire, Burglary and Glass, if that is what you wanted. This caused considerable paperwork for business owners, hence, insurers introduced a policy that provided all the common sections of insurance required by typical SME business, known as Business Package or even Business insurance.
Commercial Property / Fire and Perils
Fire and perils insurance will indemnify you in the event that any or your Insured Property is damaged by any of the following perils:
- Wind and Water;
- Impact by vehicles or animals;
- Aircraft and other Aerial devices and/or articles dropped therefrom;
- Riots or Civil Commotion;
Flood coverage can also be provided. If Flood insurance is required, please discuss this with Business Insurance Specialists Pty Ltd as some policies provide this as an automatic inclusion, whilst the majority exclude Flood cover and will need to be added if required.
Burglary / Theft
Burglary insurance will cover property (excluding money) which may be lost as the result of:
- Theft consequent upon actual forcible and violent entry upon the premises or any attempt thereat;
- Theft or any attempt thereat by a person felonious concealed on the premises.
- There are common exclusions in this policy such as Shoplifting.
Electronic Equipment insurance provides coverage for breakdown to Electronic Equipment.
The usage of Electronic Equipment is part and parcel of our everyday lives.
As a result, this equipment requires coverage for damage including electronic or electrical breakdown.
In today’s environment, even with big mechanical equipment, there is a strong element of electronic equipment eg CNC (Computer Numberic Control) controlled, and we would recommend that if you are a manufacturer or a business where your equipment is essential, that you strongly consider the better style of breakdown insurances involved.
In our experiences with clients, it is mentioned sometimes that “we do not need breakdown insurance because we have a warranty”. We respect this, however, you need to consider if your warranty provides you coverage for, amongst other things:
- Power surge or Operator error, both of which are common exclusions in warranties
- Excludes Business Interruption or spoilage losses. This type of coverage, can be provided under better equipment policies; and
- Limitations on coverage under warranty to breakdown caused by the equipment supplier - the least likely way a breakdown would occur.
Machinery Breakdown insurance is a form of insurance to cover loss of income and increased costs resulting from damage by a peril insured under a Machinery Breakdown policy due to manufacturing downtime.
The best style of Breakdown policies will cover repair without depreciation or functional replacement of almost any fixed pressure, mechanical, electrical, and electronic equipment device that breaks down.
The types of extensions that are available with these better policies include:
- Business interruption,
- Additional expenses,
- Deterioration of stock,
- Service interruption cover, which protects you from a breakdown of a third party’s equipment by triggering the business interruption and spoilage sections (if included) within your policy,
- Wear and tear not excluded, and
- No age limit on equipment
It is also important to note that a standard Business Package policy, that even has Business Interruption insurance, will exclude coverage for Business Interruption – reduction in Gross Profit - as a result of breakdown. It is thus important that you take a separate Breakdown policy that includes Business Interruption to provide coverage for this gap in coverage, if it is important to you.
Costs for these types of policies do vary - from expensive policies with high dollar limits and less exclusions, to more standard basic style policies.
Business interruption insurance provides cover for reduction in Gross Profit as a result of Insured Damage to your premises.
The requirement for Insured Damage is commonly known as “the Damage Provision”. Business Interruption is also called Consequential Loss or Loss of Profits insurance.
Business interruption is a type of insurance that is often misunderstood, and for this matter, Business Insurance Specialists Pty Ltd, can specifically reveiw your Business Interruption calculations if required. It is important to remember, that this insurance will pay for all your insurable expenses plus net profit, if determined correctly.
It is important to note that Loss of Income from an uninsured or excluded event, is not covered by Business Interruption. For example, if Flood is not insured but a Flood event occurs and Business Interruption results, you are not insured for the resultant Business Interruption.
In addition, if a Cyber event occurs, and you have no access to your computers for a month, and Loss of Income results, you would need to have a proper Cyber policy that provides this coverage, because your Business Interruption section of your business policy will not provide coverage.
For corporate clients a more structured Business Interruption policy can be provided that includes cover for loss of income arising from damage to:
- Supplier premises
- Customer premises
- Utilities such as electricity stations
- Arising from murder, suicide
- Premises in the vicinity (Shopping Centre)
- Loss of Attraction
The main reason, when a newsreader stands in front of a burnt down factory, and interviews the owner who states they have to lay of x number of people, or close the business down, is due to inadequate or a lack of Business Interruption insurance.
General Property insurance is also called Portables insurance or Special Risks insurance.
This coverage is for property lost or damaged anywhere in Australia. Standard exclusions are based on the type of item being insured, or the type of loss incurred.
Some policies will require certain items to be listed before coverage is provided - such as photographic equipment.
For Theft coverage to be provided under this section it is normal that forcible entry to the premises or vehicle.
Glass insurance provides protection to you for Damage to Glass.
Additional benefits are also provided such as damage to the window frame or temporary shuttering.
This type of insurance has exclusions such as chipping of glass or where there is no complete fracture of the glass.
Liability insurance protects you for loss suffered by Third Parties arising from your business activities that you are liable for.
Personal injury or Property damage (known as ‘triggers’) must occur first, with resultant financial loss also insured.
As with all insurance policies, these types of policies are provided with exclusions, and on this basis, it is important that you are aware as to how your insurance operates.
There are many exclusions relating to Liability insurance, including:
- Injury to employees
- Injury arising from asbestos
- Damage or injury from registered vehicles
Money insurance provides coverage for loss or theft of money in following situations at a business:
- During business hours
- Outside business hours
- In safe - 24-hour basis
- In transit
- At private residence
The need for this section of coverage has reduced in recent years due to customers making more payments via EFTPOS or Credit Card.
Tax Audit insurance provides coverage for Accountancy Fees as a result of a regulatory audit.
These audits can be initiated from various sources including ATO, or ACCC. It is important to note this insurance does not cover any fines imposed, and also will normally not provide coverage where a Tax Penalty of a certain % is exceeded.
In recent times, Tax Audit insurance has been offered via many different policies, and it is beneficial for the client that this coverage, that other policies are checked to ensure you do not already have this insurance.