Whether you own a small cafe, factory or large warehouse there will come a time where you need to ask yourself what business insurance do I need in Australia? Do I really need business insurance?
As a business owner, it’s in your best interest to protect what is yours and possibly, the lifeblood of your existence in which you spend hours a day pouring your sweat, blood and tears into.
Think about the bushfires currently wreaking havoc across the east coast of Australia, destroying homes, driving animals to the brink of extinction, while demolishing businesses, dreams and lives.
Or, the cyclone that is ripping through the northern parts of Western Australia and bringing businesses to a grinding halt.
Do you have enough cash flow to sustain? Are there any contingency plans in place to ensure the success of your business throughout these hard times? Is your equipment covered?
On the opposite end of the spectrum you have theft, vandalism, property damage, loss or damage of machinery — these are all factors that can affect the day-to-day operations of your business, which may end up costing you thousands of dollars, maybe even your bread and butter.
This is why it is absolutely necessary that all business owners protect their property with the right building insurance.
You see, there are many ways to protect your business in such unfortunate events, however, the problem may arise if the selected method does not complement your business needs.
In this article we take a deep dive into commercial property insurance coverage:
- What is building insurance?
- What does it generally cover in Australia
- Special circumstances, contents and property may be covered
- What to avoid when getting cover
- Risks associated with the cost of the premium
What is building insurance?
Also known as business property insurance or commercial property insurance, is a safety net designed to protect businesses against the damage or loss to property and essential business equipment.
There’s no telling when disaster will strike, and whether you lease or own a business property, is your piggy bank prepared for the worst?
Here’s why smart business owners get commercial property insurance:
- If your premises or contents are damaged or lost, coverage will help you replace or repair these assets.
- When crisis strikes, enjoy peace of mind in knowing your assets are covered, and that you don’t suffer a significant financial loss or lose your business.
- Varying policies may also provide additional coverage such as the removal of debris, cost of fire extinguishment, and funding for your building and contents.
What does property insurance cover for a business in Australia?
Insurance policies will vary from company to company, so we recommend reading the fine print and confirming the details of what’s covered in your policy with your insurance provider.
General coverage provided by most policies may include:
- Loss of or damage to premises and contents
- Water damaged caused by a burst pipe, damaged water mains and water systems
- Accidental damage to property
- If there is any loss of or damage to contents and stock caused by dishonest employees, theft, vandalism, armed hold up or assault
- Damage to glass or signs on the premises
- If machinery breaks down
Special circumstances contents and property may be covered:
- Natural disasters including fire, earthquake, lightning, storm, wind or rain, and hail
- Vandalism, theft or attempted robbery
- Stock damaged in transit
Common mistakes to avoid when getting cover
Reading the fine print on insurance policies isn’t an easy task nor is it fun. It’s very time consuming and can often get a little confusing. Here are some common traps to avoid and if in doubt, always seek expert advice from an insurance broker.
- Fail to update cover. One of the largest mistakes many business owners make is forgetting to update their cover to accurately reflect the increase in overall value of the business. This can include renovations, rising building costs, or additional machinery.
- Underinsuring. A common mistake made by most small business owners is underinsuring their property. Although you may save a few quick dollars, underinsuring your property for less than it’s actually worth can have catastrophic financial consequences.
- Not reading the fine print. We can’t stress this one enough. Go over the fine print with a fine-tooth comb so that you know exactly what your policy covers. If you aren’t aware of what’s excluded in your policy, you may end up with a nasty surprise when the worst occurs.
- Not seeking professional advice. Insurance policies are known for their complexity, have you seen the fine print? If in doubt, get expert advice from an insurance broker to ensure you receive a policy suited to your business needs.
What are the risks associated with the cost of your premium?
There are a number of factors that can affect how your premium is calculated, with higher level risks increasing the overall cost.
For example, installing a high-quality, commercial roller door improves the security of your business, and therefore reduces the risk of your business falling victim to theft or burglary. By reducing the risk you can reduce the cost of your premium.
Here’s what your insurer will look at when devising their policy for your business:
- Size: Typically, the larger the space, the more your premium is likely to cost.
- Security: Increasing your security measures, including CCTV, secure garage doors, monitored alarms, and steel bars on windows can help reduce your policy premium.
- Location: The location of your property may also affect the cost of your premium. For example, suburbs that experience a high volume of theft, vandalism, theft or extreme weather events can attract a higher premium.
- The type of business: Different risks are associated with different types of businesses. For example, a restaurant operates very differently to retail or an office.
- The materials the building is made of: Some construction materials may attract a higher premium as they bring a higher level of risk. Combustibility or water damage in older buildings that contain galvanised steel piping, EPS panels or asbestos will incur a higher premium.
When it comes to insuring your commercial property, purchasing building insurance is a no-brainer. With the right knowledge and foundations of what’s actually included in your cover, understanding the common mistakes to avoid, and how to prepare your property you can ensure you receive the right policy that’s suited to your business.