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How to protect your business – Insurance

Home > Money With Melanie > Business Development

17 / Mar / 2008

OFTEN THOUGHT OF as the necessary evil, insurance for many business owners is easily deemed ‘dead’ money. However, if adequate insurance is not there when you need it, the outcome can be dire, with 70 per cent of Australian small businesses disappearing after a major adverse event.

Like all business related expenses, your business insurance is generally tax-deductible. It is important to plan for your business insurance in the same mind frame that you do all other expenses. In reality, it is a cost of doing business – like rent, interest charges, fuel, and wages -and it is vital for effective business operations.

Smoothing out your insurance payments month-by-month is one way to ease the pressure of accumulative costs. By direct debiting your insurance premium, your premium outlay is just another monthly outgoing, which can be managed within your business budget and save you suffering the stretch over one bulk amount. Alternatively, if you prefer to get your business expenses out of the way in one swift go, you can pay an annual premium as a single lump sum.

Research the cover you need for your business before taking out insurance. Always shop around for the product that best suits the needs of your business. Remember this is not always justified by the lowest premium. Business owners should always be mindful to insure their business, business assets and business risks.

Theft/burglary

Depending on the type of business operation, the burglary exposure can be quite high. Retail stores generally have large amounts of cash on the premises and in some cases the products sold are attractive to thieves and can easily be sold on the streets. The premises’ security is the most important loss control measure.

The burglary exposure for restaurants and cafes can be significant as you may operate late at night with large amounts of cash on your premises.

Fire

Good housekeeping practices are the key to limiting fire exposure. Faulty wiring, malfunction or overheating of machinery and electrical equipment are the main ignition sources.
The fire exposure in restaurants and cafes can also be substantial, as there are many ignition sources and a heavy fire load in the kitchen. The most common source of fire comes from grease build up.

Public/product liability

Most liability claims result from poor
housekeeping, such as untidy premises and little room for customers to move within the store. Liability claims filed as a result of faulty products are generally the responsibility of the manufacturer.

Restaurants and cafes are susceptible to liability exposures, such as slips, trips and falls due to slippery floors. Outbreaks of food borne illnesses may lead to ‘class action’ where several people are affected.

Additional exposures

Claims for wrongful detention and false arrest arising out of the handling of shoplifters and personal injury to delivery contractors at loading docks are other types of liability claims. Additional to this, liability exposure can relate to any error or omission in connection with the sale of NSW Lottery- tickets. If your small business is a newsagency that sells NSW Lotteries, it is a requirement to have specific insurance cover for Errors & Omissions.

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