Businesses encounter risks on a daily basis, regardless of the type, industry or even the size of the business. Business insurance is, therefore, an essential part in the management of these risks for proper business operations. For small uninsured businesses, any accident or eventuality can result in massive losses or eventual business closure. But what type of business insurance suits your circumstance?
Compulsory Forms of Business Insurance
Depending on the type of business you are operating, there are several business insurance options you need. However, there are those that your business needs to have as a compulsory operational requirement, especially if you are in Australia:
- If your business employs other people, it is mandatory that it must have workers compensation insurance. This is aimed at covering your employees against accidents and illnesses.
- If your business has a vehicle, you must have third party personal injury insurance. This is normally charged in the process of vehicle registration in Australia.
- It is highly recommended that every company should have public liability insurance. Though not strictly mandatory, public liability insurance protects the business from costly eventualities in case of being sued. The likelihood of the business being sued for common accidents, such as injury or death, property damage and negligence, is very high, and having your business insured against these eventualities is a sure way of business success.
Other Insurance Forms
Although it is not mandatory to have additional forms of insurance, it is very important to have all your business assets, liabilities and revenues insured. This will prevent your business from future losses. In this case, other insurance forms that your business should consider include the following:
- If you have already registered for Goods and Services Tax (GST), you can claim GST credits on your insurance component of GST. In order for this to work to your benefit, you need to inform your insurance service provider on the premium value that is for business only. The insurer will not charge you GST. You also have the option to pay the GST amount, but claim it back from the taxation office.
- If you are a member of an industrial association relevant to your operations, it is important to check whether your association offers insurance. Some associations are known to buy bulk insurance so they can offer better insurance deals to their members. Contacting these associations is one sure way of getting more value from your membership.