Four questions to ask before buying business insurance

When you’re busy starting a small business, it can be easy to forget about – or ignore – the importance of business insurance.  While you’re busy juggling your staff, suppliers, cashflow, marketing and clients, business insurance can all too easily fall into the “too hard” basket.

However, running your own business can come with a lot of risk. If you’ve been thinking about taking out business insurance but you’re not sure where to start, we’ve made it easy for you by sharing four questions to ask yourself before purchasing cover.

1.What are my business risks?

Some business risks may be obvious and others may be harder to identify. An option is to speak with a trained consultant and to consider the following points*:

• The nature of your business: do you provide a professional service or give specialist advice?
• Where does your business take place: do you have a physical premises, is your business online, or both?
• How you do conduct your business: do your customers come to you, or do you visit them?
• The people you rely on: do you employ any staff, or rely on contractors or suppliers?
• The resources you rely on: what utilities, equipment, machinery and technology do you need to effectively run your business?

Once you’ve identified these key factors, play the devil’s advocate and think about what could potentially go wrong and start making a list. This can prompt you to confirm what you could be held liable for, the things you can’t operate without and the assets you want to protect.

2.What type of insurance is available?

Below are some examples of types of policies available, each of which will be subject to the terms and conditions of the particular policy**.

• Public liability insurance: Is designed to provide protection for you and your business in the event a customer, supplier, or a member of the public make a claim because they are injured or sustain property damage as a result of your negligent business activities
• Professional indemnity: Can protect your business against claims for damages resulting from your negligent act, error, or omission while you’re working for a client
• Cyber liability: Can provide cover for your business’s exposure due to data breaches or theft or loss of client information that result from cybercrime, including the costs of recovering data, fines and penalties, extortion costs and expenses from any disruptions caused by cybercrime
• Management liability: Can cover both the business and its directors and officers for claims arising from any actual or alleged mismanagement of the business.
• Business insurance pack: Can cover your business, including its premises and contents, against loss, damage or theft. There are a number of options that you can choose to include in a business insurance pack such as contents, building, business interruption and more .

3.How much insurance do I need and how much will my premiums cost?

How much insurance you need can depend on a few different factors. Similarly, the cost of your premiums will vary depending on your needs. When your insurer is calculating your premiums based on the level of cover you choose, they may take the following into consideration:

• Business industry
• Nature of the business
• Location of business
• Size of business
• Claims history
• Nominated sum insured
• Products produced and/or sold
• Third party interaction.

4.Where can I buy business insurance?

Once you’ve asked yourself these questions and completed your initial research, you could speak to a business insurance consultant to help you compare policies.

With thanks to  Jessie Petterd ,  iSelect and Inside Small Business.