How to Adapt your Insurance needs as your Business grows

When you started your business perhaps it was just you as a sole trader and your know-how and hard work, but after some time you’ve grown it until it has become a much bigger enterprise. When you started you took out the insurance that you needed to cover what you had at the time and what services you offered. Now that things have changed it’s likely that you will be due for a reappraisal of your insurance cover. Insurance needs to be adapted as your business grows. Does your insurance still adequately protect your business as it is now?

What are the signs of business growth?

Increased revenue and busyness are obvious signs of growth, but that is not the only sign that your business is getting larger or evolving. Read on to see what to look for:

  • Your revenue is increasing. According to the Australian Tax Office (ATO) small businesses have less than $2 million in aggregated turnover. Turnover above that figure puts your business in the medium sized category. According to the ATO revenue of $250 million a year puts a business in the large business category. As you move up the revenue scale these numbers can give you a guide to how big you are getting.
  • You have more employees than before. According to the Australian Bureau of Statistics (ABS) small businesses are those that employ less than 20 people. Within this category are all sole trader and partnership businesses. However, taking on even one employee when you had none before will put you in a new category as a business. If you have an employee, that makes you an employer, and you will have new obligations and responsibilities as a result.
  • Your business structure is getting more complex. If you have started to build a hierarchy and open up new positions this is a clear sign of a growing business. If you have appointed managers, HR, financial officers, a marketing team etc this means that your business is growing and evolving.
  • You have acquired more equipment, vehicles and property. If your business has more invested in equipment, vehicles and property then this indicates significant growth.
  • Your business offers new and different services and products. This is typical of a growing business. In the beginning you have a few core products or services but now as your business grows, the number of products and services you offer is more numerous and varied than before.

What types of insurance do growing businesses need?

It’s time to take stock of where your business is now and what risks it is exposed to. See the below list of insurance policies to get an idea whether your growing business is still adequately covered. There are other important insurance policies that may apply to your business besides these. That’s why it is best to consult a trusted insurance broker.

Workers compensation, employer liability and employment practices liability insurance

When you start to have employees you will need to take insurance for them as an employer. Workers compensation is compulsory for employers in Australia to protect workers who are injured at work. Employer liability is important to protect your business against claims that fall outside of workers compensation or where workers compensation is not sufficient. It covers cases where you are found as an employer to be liable for an incident because of your negligence. There is a further insurance type which covers your business in cases of claims made against the business for employment practice violations such as unfair dismissal, sexual harassment or discrimination. This is called employment practices liability insurance.

Management liability

This type of insurance provides protection against the financial exposures that come with managing a company. It covers the business against claims concerning mistakes or deliberate actions from the company or its directors, officers or employees.

Plant and machinery

Your business may have invested more capital into and become more reliant on your machinery and equipment including your IT equipment. If these go down or break they can have a large impact on the operation of your business and be expensive to replace. This type of insurance can cover spoilage of stock, business interruption losses, data restoration and cover for losses arising from service interruption.

Public Liability

Public liability insurance is recommended for all companies and even more so as the business grows. Unfortunately many accidents are unpredictable and therefore hard to prevent. If your business is found liable or even just sued, the cost of legal defence or compensation can be extraordinarily high.

Professional indemnity

Your business may have now begun to offer professional advice. As good as this is it unfortunately means that you face additional risks. If your business is sued because of the professional advice you gave, the damages claimed can be astronomical. This type of insurance will help protect your business from financial loss in such cases.

Contact your insurance broker for a review of your business risks and insurance coverage

Your business is unique and so is its risk profile. If your business is growing, contact trusted insurance brokers in Perth so that you can have an expert assessment of your risks and insurance situation to adapt to your changing insurance needs. Insurance brokers work on your behalf to help you understand your business’ insurance needs and get you the best insurance..