As an experience, owning and running a small business is often as stressful and chaotic as it is exciting and rewarding.
As a small business owner, you must consider a huge range of factors in order to ensure your business succeeds, such as sourcing capital, complying with regulations, hiring staff and promoting your products or services.
However, insurance is another factor that must be considered. Unfortunately, it is often overlooked by many business owners.
Insurance must be viewed as an investment into your enterprise, rather just another business expense.
Like all investments, you should carry out proper due diligence.
Of course, this is not always easy. You may not fully understand what risks your business is exposed to, for example. Alternatively, you simply may not have time to spare to acquire the most appropriate cover.
This is where insurance brokers play a critical role.
Insurance brokers can assess your business’s risks and recommend the most appropriate level of cover from a range of different insurers. The cover can be tailored to meet your specific needs.
Relying on the expertise of an insurance broker is a great way of ensuring you’re getting the best level of protection for your premium. It allows you to focus on your enterprise.
This can become particularly important for small businesses that are growing and changing.
When their businesses are still in their infancy, many owners opt for a basic business insurance package. These are often adequate for many small businesses in these early years.
However, any changes to your business could mean your insurance is not up to date and is inadequate.
For instance, if you have acquired new equipment or stock, completed building improvements, or moved into new premises, you must adjust the sum insured on your insurance cover so it matches the cost of totally replacing all your equipment and contents if they were all lost in a single event.
Some of items may also have increased in value or become harder to replace, so your coverage must be adjusted accordingly.
Likewise if your revenue has changed, you will need to ensure your Businesses Interruption cover is still accurate. If you suffer a trading interruption after an insured event and the amount of revenue covered is inadequate, you might be underinsured. Make sure you cover for the total amount of revenue.
A broker can advise you how any of these changes are affecting your business and help you secure the most appropriate level of coverage.
In addition to the risks associated with growing businesses, your business could be exposed to more complex risks not covered by basic insurance packages.
Complex risks require specialist insurance covers that you can only access via insurance brokers.
For example, if you start importing goods for your retail shop, you may need to take out Marine cover to protect the stock as it in transit. Marine cover is not actually limited to maritime cargo. It can also cover cargo on road, rail or air transport.
If you hire more staff, you may need to consider Management Liability to cover the costs of legal action and penalties associated with employment-related matters, such as wrongful dismissal and workplace bullying.
If you provide a service to clients, such as bookkeeping or real estate advice, Professional Indemnity is an important cover to consider. It can cover your business in the event that you or your employees cause your clients to suffer a loss as a result of professional negligence or errors.
An insurance broker will become an ongoing partner in your business’s success. Together, you can ensure your business has the appropriate cover in place as it grows, changes and becomes exposed to new risks.
Brokers can help you find the peace of mind to get on with running your business.
John Phillips is the chief underwriting and portfolio manager & commercial, Vero Insurance. For further information contact: vero.com.au
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