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A Guide to Business Insurance in Australia

insurance policyThe Different Types of Business Insurance in Australia

Oh no. We're going to talk about that nasty thing no one likes to pay, but everyone has to have: Insurance. You have to have it for your cars, your house and also your business. So what sort of business insurance are important? What should you have and what shouldn't you have? What is over the top and what is not? Now, it obviously all depends on the type of business that you're running. We deal with a lot of industries, and for us, we have a lot of different types of insurance.

Professional Indemnity

The obvious one here, professional indemnity. You need to have that. That's an important one. The amount that you'd need is all dependent upon, again, your industry, but normally talking like $10, $20 or $30 million or something like that, or higher. Again, it just depends on who you're dealing with.

Key Person

If you're a small business, an insurance that I think is absolutely invaluable is key person insurance. If you're a very small business and I’m talking like one-person businesses, and you bring on an extra staff member. They start doing the voodoo that you're doing and you're starting to grow your business and everything's starting to look really, really good. You go, "Okay, how am I going to do this?" And they start learning everything. You're teaching them everything. You start sticking back, changing the roles that you're doing because they are doing the things that you are doing. You need to sort of work out what happens if they leave, get hit by a bus or something worse.

A key person insurance is really important with a small scale business or any business where you know that if someone left, it's going to be an incredibly hard task for you to take on their work again. Think about this: If you've got a key person in your business and they were to disappear, how long would it take you to train up that new person and how much downtime would that cost? That insurance is very, very good.

Read: Are Employees an Asset or a Liability?

Service Level Agreements

There are other insurances that you should be looking at such as uptime continuity, insurance and equipment insurance and things like that so that if there is downtime in your business, you have some way to rely on that. However, sometimes it's not all about the insurance.

If you have service level agreements, or what's called an SLA, set up with any of your suppliers that are supplying mission-critical infrastructure, then you might be okay. Telstra and other big companies, for some of their business-based Internet plans, offer these SLAs to make sure that you're able to have guaranteed uptime. This goes not just for service level providers such as Telstra, but also a lot of cloud providers. So applications such as Zero and what not.

Read: How to Pick the Right Internet Connection

Make Sure You’re Using The Products You Need

What it comes down to is making sure you're using the products that you need. If you're running an online business and you are heavily relying upon your website, you need to make sure you're going with a fantastic host, which has something what's called the five nines or better. That means it's up for 99.999% of the time. If you get the four nines or something like that, it's still quite good, but you just have more of a chance for it to go down. If it's just 99% of the time, that means one in every hundred days it can be down. It doesn't sound very good all of a sudden.

So you want to make sure that at the top, top point of all of the primary elements of your business, there is zero to little, very, very little downtime. High-level agreements where the service level agreements are giving you what you need. The best way to work out to make sure you don't over-insure yourself is thinking about the potential of downtime, how much the insurance is costing and how much it would cost if your business didn't have that facility.

Read: Your Hosting Provider Sucks!

What We Have

For us, we've got all sorts of different insurances. Any of our server's infrastructure in Melbourne, Brisbane and Sydney, any of the infrastructure that we have, if there was to be a flood, fire, theft or some sort of big, catastrophic event we've got insurances to make sure that from the moment. Whatever our income was at that stage, as it builds back up, we were able to know that we're being subsidised with the difference from the insurance company until we're able to bring our clients back.

The Final Word

There's all sorts of insurances for all sorts of things, and it honestly comes down to what it's worth for you. If you're running a mum and dad shop from your garage and if your website goes down it doesn't matter a whole bunch. If this is the case then yeah, you probably don't want to get website insurance or anything like that. But at the same time, if you're in a position where you had $10,000 every two hours or every hour going through your website and there is no storefront and that is everything and your expense is $8,000 over the same time period, you then have to start wondering, "Well, it's probably worthwhile getting a decent level of insurance for that peace of mind, if anything else." Stay good!

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