AIB Insurance, Author at AIB Insurance

Australia is home to around 130,000 retail trade businesses of all shapes and sizes. If yours is one of them, you’ll know that keeping sales ticking over and maintaining healthy profits is no easy matter. There are pitfalls aplenty, for new players and old hands alike.

Without the right insurance cover, it can be easy to come unstuck. That’s why it pays to be prepared for whatever challenges may come your way.

These are some of the common exposures retail business owners need to protect themselves against.

PROPERTY DAMAGE

Depending on the nature of your business, the value of your stock and contents may run into the tens or even hundreds of thousands of dollars. Property insurance can help you to replace them, should your business be impacted by a natural disaster or fire.

Without it, you may find it impossible to raise the capital you need to reopen and continue trading.

And if you own your premises, you’ll need cover for that too. Building insurance can help with the cost of moving to an alternative location and making good the damage, if you’re unlucky enough to experience an adverse event.

WORKPLACE INJURIES AND PUBLIC LIABILITY

If customers or staff are injured while visiting or working in your store, they may be entitled to seek compensation.

Having appropriate workers’ compensation and public liability insurance can help you cover the cost, should that occur.

Prevention is always better than cure, Steadfast Broker Technical Manager Michael White points out.

“Rigorous workplace health, safety and training procedures can minimise the likelihood of trips and slips, and the incidence of employees hurting themselves on the job,” he says.

THEFT

Should your business have an open premises, chances are it has been a victim of shoplifting or stealing.

You’re not alone – crime costs the sector a collective $9 billion a year, according to the National Retail Association.

Losses erode profitability, which is why it’s essential to take steps to minimise them. Camera surveillance and security tags on high value items can be deterrents for those seeking a five-finger discount at your expense.

Because of the frequency with which it occurs, insurers are generally reluctant to offer cover for shoplifting. Retail business owners who succeed in obtaining a policy are likely to find it comes with a high excess, White warns.

CYBERCRIME

In today’s times, retailers must also be aware of another form of theft: that of commercial and customer data.

Australia’s cyber watchdog, the Australian Cyber Security Centre, received 76,000 cybercrime reports in FY2022. The average cost per report was more than $39,000 for small businesses, and $88,000 for medium businesses.

“Retailers need to be on their guard against criminals seeking to steal from them, via phishing scams and social engineering gambits, such as the sending of false invoices in the names of legitimate suppliers,” White says.

“It’s also incumbent upon retailers to take all reasonable precautions to prevent third parties gaining access to customer data which can be used for fraudulent purposes, such as identity theft.”

Implementing stringent cyber safety practices can make your enterprise a smaller target. And if you’re unfortunate enough to experience a cyberattack or data breach, cyber insurance can help cover financial losses and the cost of remediation.

COVER TO KEEP THE DOORS OPEN

If it’s been a while since you reviewed your business insurance, now is a great time to do so. To discuss all your retail cover needs, contact your AIB broker today.

Important notice – Steadfast Group Limited ABN 98 073 659 677

This general information does not take into account your specific objectives, financial situation or needs. It is also not financial advice, nor complete, so please discuss the full details with your Steadfast insurance broker as to whether these types of insurance are appropriate for you. Deductibles, exclusions and limits apply. These insurances are issued by various insurers and can differ.

Australia is home to more than 30,000 restaurants, 28,000 cafes and coffee shops and 9000 pubs, bars and nightclubs. If yours is one of them, you’re likely to be already familiar with some of the challenges that are part and parcel of running a hospitality business. It also pays to be prepared if you plan to open your own establishment.

There’s a lot that can go wrong and without the right insurance cover in place, it’s easy to end up out of pocket or, in a worst-case scenario, out of business.

These are some of the most common exposures hospitality business owners need to protect themselves against.

PUBLIC LIABILITY

If someone slips on your dining room floor, contracts food poisoning after eating in your establishment or suffers any other form of injury while on your premises, they may decide to seek compensation.

Public liability insurance can help cover the cost of personal injury and property damage claims made by individuals other than your employees. The nature of your business will determine the level of cover you’re likely to need.

“The risk of fights, for example, is much higher when you’re running a club versus a café or restaurant because people aren’t necessarily going to be drinking as much alcohol in the latter,” Steadfast Broker Technical Manager, Michael White explains.

PROPERTY AND MACHINERY DAMAGE

If your business does any form of cooking, the risk of kitchen fire can be present. Property insurance can help you to repair the damage should a blaze break out, while machinery insurance can be used to replace any equipment that’s damaged or destroyed.

Sometimes the rectification process can be a protracted one if equipment or parts aren’t readily available or need to be imported from overseas.

“Some special orders can take up to six months,” White says.

BUSINESS INTERRUPTION

That’s when business interruption insurance can come into play. Designed to help your business keep running after a catastrophic event, it can help to cover ongoing costs while you recover and rebuild.

“If you’re unable to cook or offer your full menu, for example, your takings may be significantly reduced,” White explains. “Business interruption insurance can help tide you over until you’re ‘cooking with gas’ again.”

WORKPLACE INJURIES

Hospitality environments can be fast-paced and hazardous, which means the risk of workers injuring themselves on the job – think burns, cuts and slips and trips – is high. That’s why it pays to implement stringent workplace health and safety procedures and to ensure all employees are adequately trained.

They’re can be entitled to seek compensation for any physical or mental injuries incurred in the course of their employment, so having appropriate workers compensation cover can help you meet the cost, should that occur.

THEFT AND BURGLARY

Unfortunately, break-ins can be a common occurrence for businesses across all sectors, including hospitality. Theft and burglary insurance can cover loss or damage to your stock and contents resulting from forced entry.

COVER TO KEEP YOUR HOSPITALITY BUSINESS HUMMING

If you haven’t reviewed your business insurance for a while, now is a great time to do so. To discuss all of your hospitality cover needs, contact your AIB broker today.

Important notice – Steadfast Group Limited ABN 98 073 659 677

Across Australia, businesses of all shapes and sizes are turning to information communication technology to automate repetitive tasks, reduce overheads and increase sales and profits.

So is the insurance sector. Eighty percent of local insurers are using Insurtech – tools and technologies designed to make the insurance industry more efficient – according to the results of APRA’s 2020 InsurTech survey.

And they’re finding a wealth of applications for artificial intelligence (AI) in insurance – computer systems that can mimic the way humans perform tasks and, over time, use the data they collect to improve the way they operate.

AI IN INSURANCE BECOMES EYES IN THE SKY

AI is being used in conjunction with satellite imagery to amass data about everything from the health of livestock and crops to the characteristics and condition of real estate assets. Having this detailed information on hand can make it quicker and easier for insurance companies to generate quotes and policies for customers.

The same technology can be used to gather intelligence about flood risks and assess the damage caused by natural disasters, such as bushfires and cyclones.

The information can also then be used to help insurers provide policies and settlements that more accurately reflect the risk and the level of damage sustained.

Meanwhile, the incidence of fraudulent claiming can also be reduced with the ability of assessors to have the facility to compare highly detailed ‘before and after’ images.

SMARTER AND SAFER WORKPLACES

AI is also being used to improve workplace health and safety. In the US, for example, insurers have captured video footage of workers in manufacturing facilities and have subsequently used AI to help analyse the risks associated with specific postures and positions.

Armed with this data, the businesses in question have been able to modify their ergonomics, thereby reducing the likelihood of workers’ compensation claims and, ultimately, the premiums they pay for their cover.

ROBOTIC PROCESS AUTOMATION

And, back at the office, the claims handling process is being sped up considerably through the use of robotic process automation – software that can perform a wide range of defined actions faster and more accurately than humans are able to do.

SMARTER INSURANCE FOR SMALL BUSINESSES

Being able to reduce costs and become more efficient using AI isn’t just good for insurers. It can also have benefits for customers, Steadfast Director of AI and Emerging Technology Steven Tuften says.

“As well as more accurate claims assessment and faster processing, businesses can look forward to insurers being able to offer more customised cover,” Tuften says.

“Over time, AI may enable insurers to replace fairly generic policies with tailored ones, courtesy of the fact that individual risk will be able to be analysed in far greater depth.

“That may result in savings for businesses that have demonstrably low risks or are prepared to invest in measures to reduce them.”

Understanding your business insurance policies

If you haven’t reviewed your business insurance for a while, it may be a good time to consider whether you’re adequately covered. Contact your AIB broker today to discuss your policies and how they are calculated.

Important notice – Steadfast Group Limited ABN 98 073 659 677
This general information does not take into account your specific objectives, financial situation or needs. It is also not financial advice, nor complete, so please discuss the full details with your Steadfast insurance broker as to whether this business interruption insurance is appropriate for you. Deductibles, exclusions and limits apply. This insurance is issued by various insurers and can differ. You should consider the relevant Product Disclosure Statement and any Target Market Determination in deciding whether to buy or renew this type of insurance.

With cyber crime on the rise, it’s becoming a matter of when, not if, a business will be the victim of an attack. So it’s vital to have a well-developed response plan ready to go in the event of a ransomware attack or other cybercrime.

Here are five of the key steps to take.

1. Trigger your disaster recovery plan and contact your insurer

Your approach to cyber security should have a clearly articulated strategy which you can learn more about in our recent blog on Cyber security incident response. You should also immediately contact your cyber insurer, who may be able to appoint an experienced forensic expert to assess the damage from the attack. These experts can investigate how the attack occurred, the strain of ransomware or other attack, and can suggest other remediation steps.

At this stage, you may want to seek advice from a professional about disclosing the breach to government bodies, regulators and other stakeholders, including affected customers and staff.

2. Restore stolen data from backups

Ideally the business will have recently backed up its data and system externally to servers that are not connected to the main network. That way, the criminals can’t delete the back up and the business can be backed up and running in a relatively short time space.

How frequently to undertake back-ups depends on the nature of the business. As a general rule, the greater the frequency and number of transactions the business does, the more regularly it will need to back up this information. For some businesses, it will be minute-by-minute. For others, back-ups once a day are sufficient.

3. Make a commercial decision about paying a ransom

In general, it’s inadvisable to pay criminals a ransom after an attack. But from time to time, businesses may have no choice but to take this step. This is often when they have not adequately backed up their data, and paying a ransom is the only way to get access to it.

This is even more reason to ensure good back up hygiene. If there’s no choice but to pay a ransom, your insurer may require proof the criminals are in possession of the data before any money is transferred.

4. Implement a post-recovery plan

Once you have access to your data, it’s time to get back to business. This starts with a health check of the network.

Be aware any initial attack may be a distraction from a larger attack to a different part of the IT system. Exploring that possibility should be a focus of the health check.

Post-recovery activities may also involve work to restore the business’ reputation among its clients and other stakeholders. Follow expert advice to implement policies and procedures to help reduce the risk of future cyberattacks. Develop clear and timely communication, so no one is kept guessing about the actions you’ve taken to better protect your business.

5. Check and recheck the network

After an attack, perform regular scans and penetration tests. This involves trying to find vulnerabilities in the system so you can understand what needs to happen to reduce the risk of hacks.

DO YOU HAVE THE RIGHT COVER?

Your AIB Business Insurance broker can help you perform a risk assessment of your business to help ensure the right mechanisms are in place to withstand a cyberattack and recommend the appropriate cyber insurance policy. Contact us today to find out more.

Important note

This general information does not take into account your objectives, financial situation or needs. Information is current as at the date the article is written but is subject to change.

Steadfast Group Ltd ACN 073 659 677

Many workers like the idea of swapping paid employment for the financial and personal rewards that running their own show can offer. And while the upcoming year may hold challenges for businesses and consumers alike, there are still plenty of opportunities for individuals looking to make the switch.

Australians have long been a nation of small business owners.
There were more than 2.5 million actively trading businesses in the Australian economy in June 2022, according to the Australian Bureau of Statistics.

Many workers like the idea of swapping paid employment for the financial and personal rewards that running their own show can offer.

And while the upcoming year may hold challenges for businesses and consumers alike, there are still plenty of opportunities for individuals looking to make the switch.

In fact, many of the country’s biggest and best-known businesses were founded during times of economic uncertainty.

Those include JB Hi-Fi and Billabong, which launched in the wake of the 1973 oil crisis, and Cotton On, which began selling affordable casual wear during the recession of 1991.

Exploring new business opportunities

Starting a business in a sector or industry where work is plentiful and skills are scarce can make it easier to secure a profitable customer base.

The National Skills Commission’s Skills Priority List released in October 2022 showed technicians and trades workers were in scant supply, as were professionals and community and personal service workers.

That could be an opportunity to strike out for yourself, if you’re currently working in one of those sectors and have the appropriate qualifications or experience.

Opportunities for sole traders and small businesses are also plentiful in the transport postal and warehousing, scientific and technical services, and finance and insurance sectors, according to research released by small business software vendor Xero in late 2021.

Safeguarding your new business

Having the right insurance policies in place can help to protect your new enterprise and its assets, should something go wrong.

Underinsurance is an issue for many fledgling businesses, with other seemingly more pressing financial priorities taking precedence, according to Steadfast Broker Technical Manager, Michael White.

“This is often an area where owners look to save money, especially in the early days when money is tight, but it can be a false economy,” White says.

“Not having adequate cover for your enterprise may make it hard for you to recover and remain viable, should you experience an early setback.”

Getting the basics in place.

As a general rule of thumb, all businesses should have public and product liability insurance. The former provides cover for accidents and injuries caused by your business activities while the latter can protect your business if a product it supplies has caused harm to a person or their property.

If you intend to lease premises or invest in furniture, equipment and IT systems, property insurance can safeguard your assets against theft, malicious damage and natural disasters.

And if you’re planning to take on employees or contractors, you’ll need a workers compensation policy to cover your business against work-related injuries and illnesses.

COVER THAT CAN KEEP YOU IN BUSINESS

If you’re not sure what type of cover is right for your new business, talking to a specialist can help. Contact your AIB insurance broker today to discuss your options.

If you’re the director of a company and you have not registered for a director ID, you could risk a penalty of up to $1.1 million.

So, if you’re among the many directors who have not yet registered for their ID, now’s the time.

The Australian Taxation Office has said penalties won’t affect anyone who applied for their director ID before 14 December 2022.

Now every director is required to apply for a director ID under the Corporations Act 2001 (Cth).

You will need to have a myGovID to apply for the director ID, so if you don’t have a myGovID it’s time to get one now.

A director ID is perennial, even if the person:

Changes companies.
Stops being a director.
Changes their name.
Moves interstate or overseas.

The director ID will help prevent the use of false or fraudulent director identities and helps the government to take action against illegal activity.
It’s also important so that shareholders, employees, creditors, consumers and know who are the directors of a company.

The 15-digit ID will make it easier for administrators of failed companies to track directors between companies.

It’s also going to help stop ‘phoenixing’. This is when the directors of a failed company start a new company, a phoenix company, to carry on the activities of the previous company, just without the debt of the previous company.

As a company director, you must apply for your director ID yourself, your tax or BAS agent can’t apply for you.

The easiest way to apply for a director ID is through www.abrs.gov.au. The ABRS is a new service the federal government has launched for managing business information. You can also apply for a director ID by filling in paper forms.

Fines apply

The maximum criminal penalty for not having a director ID when required, or failure to apply for one when directed by the Registrar, is $13,200, with civil penalties extending up to $1.1 million.

Steadfast Broker Technical Manager Michael White says in the event a director receives a civil penalty, liability insurance may cover its cost.

“But insurance won’t cover criminal penalties.”

It’s important to ensure you have the right insurance in place if you are a director of a business. Talk to your broker today to find out more.

Materials commonly used to replace damaged properties, such as building items and even labour, are in short supply, driving up replacement costs.

Steadfast Broker Technical Manager Michael White says in these times, it’s important for small businesses to make sure the sum insured for their assets reflects their current replacement value so that if their property is damaged, the settlement may cover the costs.

“If the sum insured is not accurate, this may impact the settlement they receive if they have to make a claim,” White says.

INSURING FOR THE TRUE REPLACEMENT COST IS CRUCIAL

White says there are several factors to consider.

“The first thing is that in business insurance – but not in home insurance – there is generally a co-insurance clause that states you have to insure for the replacement cost of the building as at the time you take out the policy,” he says.

“That’s relevant in the current inflationary environment because, unfortunately, the cost of materials and building costs have increased significantly.”

It’s extremely important that the sum insured reflects the true replacement cost at the time the policy is taken out, regardless of what the owner believes it to be, White says.

“If the business doesn’t insure for full replacement cost, in the event of a claim, the insurer can reduce the amount of the payout even if there is not a total loss” he says.

The way in which this works is complex and depends on the wording of the particular policy. However, the following is an example from a wording which is widely used in the market.
* Sum Insured on the building: $1,000,000.
* Actual cost of replacement of the building: $2,000,000.
* Cost of repairs: $200,000.
* Amount payable under the policy = ($2,000,000 x 80%) = $1,600,000.
* $1,000,000/$1,600,000 = 62.5%.
* $200,000 x 62.5% = $125,000
* Amount payable = $125,000.

However, White says: “If the building burns down, the insurer only has to pay you the sum insured. If the insured amount is $1 million and it’s going to cost $2 million to replace, you’re $1 million out of pocket.

YEARLY REVIEW OF SUM INSURED RECOMMENDED

Underinsurance can be a serious problem in Australia, especially when people don’t regularly review the sum insured.

“Small businesses should aim to review the value of their assets at least once a year,” White says.

“Maybe at the moment, because the increases are so significant, it should be twice a year, but at least once. And every time a business renews the policy, they should be working out the replacement cost of the asset.”

“If your property or asset has an unusual feature, it’s best to use either a quantity surveyor or a valuer to get a more accurate calculation,” White says. “This should be done at every renewal, particularly in the current environment of rising inflation.”

CALCULATIONS SHOULD FACTOR IN A TIME LAG

Another point small businesses should consider is that if their building or another asset is damaged or destroyed, it may take a while to replace, as some materials are not currently accessible.

“Jobs that previously took six months can now take 12 months because the materials aren’t available,” White says.

“Also, if a significant amount of work is required, it will probably take a while to get council approval. In the time required to get either approval or for the materials to be sourced, costs could have risen again. All this needs to go in the mix when working out how much cover you require.

“This is why having a conversation with your broker is so important.”

The possibility of having cyber criminals make your personal details public is worrying enough, but did you know that criminals can also use this information to damage your business?

“When a company’s security is compromised criminals often put the data they steal up for sale on the dark web, or what is called personal information auction sites,” says Gerry Power, Head of Sales for specialist cyber insurance provider Emergence Insurance.

“One hack might make your name and email address available, which isn’t necessarily a serious loss. However, if a second attack exposes, say, your driver’s license and passport details, criminals could collect all the data they need to steal your identity.”

Loans in your name

With 100 points of identification, a cybercriminal could open a bank account in your name, be approved for a loan or credit card, take the money and leave you to make the repayments. Even unsuccessful applications can put your business at risk by damaging your credit rating.

In that case, you could find yourself locked out of new finance until the matter has been resolved – an often complex and time-consuming process.

Writing in the Guardian newspaper just after the Optus breach, Martha Bedggood, who owns a small business in Sydney, explained how a compromised phone number and email address forced her to put a six-month credit ban on all of her own and her husband’s accounts.

Four years later, the fraudulent activity still visible in her credit history is making it hard for her to get any kind of finance.

FIVE TIPS TO PROTECT PERSONAL DATA

Cybercrime in Australia is continuing to rise and, according to the Australian Cyber Security Centre (ACSC), identity theft was one of the most common threats during the 2021–22 financial year. These tips will help you to protect yourself, your family and your business.

1. Use a different strong password for every account.
2. Backup your data regularly and often.
3. Switch on automated software updates.
4. Never provide more personal information than is absolutely necessary.
5. Check every link in an email or text before clicking on it.

For more details and helpful suggestions, take a look at our article How to protect your business from cybercrime.

New insurance brings greater peace of mind

Taking some of these steps to protect your data can reduce your risk of being hacked. However, no business is unassailable – and attacks can be expensive. The ACSC reports that, on average, a single cyber event costs a small business over $39,000.

Emergence Insurance has developed the only personal cyber insurance policy in Australia for individuals and families that provides cover for identity theft and many other cyber exposures – up to $50,000 in cover for as little as $99 a year plus Government charges.

“You also have access to professionals who can support individuals and families with things like obtaining new ID, cancelling credit cards and contacting financial institutions,” Power says. “That’s how this insurance, which is only available through intermediaries, can make the whole process of recovery less stressful.”

Emergence also has a range of cyber insurance products to protect businesses. Find out more by contacting your broker today.

Important notice – Steadfast Group Limited ABN 98 073 659 677
This general information does not take into account your specific objectives, financial situation or needs. It is also not financial advice, nor complete, so please discuss the full details with your Steadfast insurance broker as to whether this business interruption insurance is appropriate for you. Deductibles, exclusions and limits apply. This insurance is issued by various insurers and can differ. You should consider the relevant Product Disclosure Statement and any Target Market Determination in deciding whether to buy or renew this type of insurance.

The recent cyber attacks on Optus and Medibank Private compromised personal information from around 14 million customer accounts. At the same time, companies including Uber, Telstra’s staff rewards program and wine dealer Vinomofo were also under attack.

Cybercrime in Australia is on the rise. According to the Australian Cyber Security Centre’s annual threat report, more than 76,000 events were reported during the 2021–22 financial year, up 13 per cent from the previous financial year.

Costs associated with each one rose by an overall 14 per cent to an average of $39,000 for small businesses and $88,000 for medium sized business – and criminals are targeting businesses of all sizes.

WHAT IS CYBERCRIME?

Cyberattacks extend way beyond the major breaches of security we hear about in the media. Other examples of cybercrime include fraud, financial and identity theft and business email compromise.

“One thing small business owners may not realise is that a breach of their personal data could put their company at risk,” says Gerry Power, Head of Sales for specialist cyber insurance underwriter Emergence Insurance.

“If criminals gain access to, say, your passport and driver’s licence details, they could collect the 100 points of identification needed to start applying for credit in your name. You might know nothing about it until you apply for business finance and find that loan applications have been refused, your credit rating has fallen through the floor, and you can’t get any finance until the situation is resolved.”

These tips to protect personal data can also boost your business security. It’s also important to follow ACSC’s advice for ransomware, business email compromise and other threats.

1. Take password security seriously
Despite all the warnings, the 10 most common passwords in 2022 were 123456, 123456789, qwerty, password, 12345, qwerty123, 1q2w3e, 12345678, 111111 and 1234567890.

“Using strong passwords, and a different password each time, is an effective way to boost security,” Power says. “Consider investing in a password software manager that can create and remember them for you. Multifactor authentication, such as a six-digit code sent to your phone, can add another layer of protection.”

2. Back up your data regularly
Victims of a cyberattack may potentially lose data created after their last backup.

“The more recent the backup, the easier it can be to retrieve vital information,” Power says.

3. Prioritise automated updates
If developers find a vulnerability in their software, they fix it with a patch, correction or change. When you opt to have these updates applied automatically to your own software, criminals can have less time to exploit the weakness.

4. Protect your personal information
Many organisations ask for more personal information than they need simply because it’s useful to have.

“The less information you provide, the less you have to worry about if they’re hacked,” Power says. “For instance, if your birth date isn’t mandatory, why share it?”

5. Check before you click
According to the Office of the Australian Information Commissioner, human error contributes to 41 per cent of data breaches.

“As technology becomes more sophisticated, scams are getting harder to detect,” Power says. “You and your staff must be vigilant, verifying every link before clicking on it.”

Find out more

Emergence has developed cyber insurance solutions for SME’s, corporates and the only standalone personal cyber policy for individuals and families available in the Australian market. Find out more about this and other protection by contacting AIB today.

Important notice – Steadfast Group Limited ABN 98 073 659 677

This general information does not take into account your specific objectives, financial situation or needs. It is also not financial advice, nor complete, so please discuss the full details with your Steadfast insurance broker as to whether this business interruption insurance is appropriate for you. Deductibles, exclusions and limits apply. This insurance is issued by various insurers and can differ. You should consider the relevant Product Disclosure Statement and any Target Market Determination in deciding whether to buy or renew this type of insurance.

COVID-19 led to many more people starting small businesses from home, often as a side hustle. But even a micro business can affect whether your current insurance policy is valid. So, what kind of insurance may you need to run a business from home? We’ll explore that. But first, it’s time to check what may be covered by your existing policy.

CHECK WHETHER YOUR HOME-BASED BUSINESS IS COVERED BY YOUR EXISTING POLICY

If you operate a home-based business, it’s crucial to check whether your insurance policies cover you if you need to make a claim. In most cases, a home and contents policy will not provide cover for a business, no matter how small that business may be.

Steadfast Technical Broking Manager, Annette O’Brien says it’s important to check the fine print in your policy.

“If you have any doubts, contact your insurance broker who will be able to assess both the type of business you’re running and your individual needs, to advise on the best policy for you,” she says.

One thing to be aware of she adds, is that in some cases, if you only have home and contents insurance, and then make an inquiry about coverage for a home business, you may find your existing policy may be cancelled.

“In one situation, a person based in Canberra who was running a small filmmaking business became concerned when he heard about policies being cancelled if the business was run from home,” O’Brien says. “He rang his insurer and was shocked when they cancelled the policy on the spot without any explanation.”

It is worthy to note that insurance companies cannot cancel policies on the spot. They need to provide an explanation to the policyholder if they intend to cancel a policy or decline a request for insurance cover because the business activity is undertaken from home.

WHAT IF YOU HAVEN’T DECLARED YOUR HOME-BASED BUSINESS?

If you haven’t declared your home-run business to your insurer, then you need to do it immediately, says O’Brien. “If your ABN is registered under your current address, then you should check the wording of your insurance policy to see if there is any cover for a home business – which is generally unlikely,” she says.

“Before you contact your insurance company, you can seek the advice of an insurance broker who can provide guidance around the best policy for your needs.”

It is important for the insurer to be aware of your circumstances as there are severe consequences for non-disclosure or misrepresentation, no matter how unintentional your actions are.

“You should also be aware that if you deliberately conceal from the insurer that you are running a business from home, it could constitute fraud, the consequences of which are very serious,” O’Brien says.

“The Insurance Council of Australia has made it very clear that it’s important to be honest with your insurer if you conduct a business at your home.”

WHAT INSURANCES DOES A HOME-BASED BUSINESS NEED?

O’Brien says there is a number of common insurance mistakes people make when running a business from home. Most of them involve people not thinking about the type of insurance they may need. “And when they do,” she says, “they’re unsure of what items to include.”

In some cases, you may be able to extend your existing home and contents policy to cover your office equipment, such as your laptop. However, it is more likely you may need to take out separate business-specific insurance policies.

Business insurance policies can include:

Public liability insurance (this is very important if you have customers or suppliers visiting your home);
Business interruption insurance;
Accidental injury insurance;
Income protection;
Money insurance;
General property insurance;
Machinery breakdown insurance; and
Tax audit insurance.

Do you have questions about insurance for running a business from home? Talk to an AIB insurance broker today.