Running your own company can be a risky business, and insurance is a great way to transfer the financial burden of these risks to someone else. Not only is this financially sound, but it will also help you sleep easily at night, knowing that you are covered.

As your business grows, it is important that you keep your insurance up to date. Using a specialist small business insurance broker will help keep your premiums down.

Types of insurance
The most common types of insurance are the following:

• Building and contents insurance (including fire and flood);
• Public liability insurance;
• Product liability insurance;
• Equipment insurance (including protection against IT failures);
• Legal expenses insurance for facing court proceedings;
• Health and life insurance for the owner;
• Key man insurance;
• Income protection insurance;
• Business interruption insurance;
• Transit insurance for goods;
• Travel insurance for business trips;
• Credit insurance for unpaid debts;
• Industrial special risk (ISR) insurance; and,
• Workers’ compensation.

We’ll look at some of these types of insurance in more detail:

Public liability insurance
This covers legal liability for injury to members of the public and damage to property arising from the business’s activities. It also covers economic loss arising from your negligence. Your liability from a successful public liability claim could be enormous and threaten your company’s survival and, if you are a sole trader, your personal finances and assets. This is one of the most essential types of insurance for any small business.

Equipment insurance (including protecting against IT failures)
This covers loss or damage to machinery or equipment as a result of a breakdown. You can also insure against the loss of food due to spoilage following a breakdown.

Key man insurance
The most important asset of a small business is the owner, and key man insurance (it is also sometimes known as the sexist key person insurance) protects the company (not the owner) from the loss of a key person within the business and the impact of this upon profitability.

In partnerships, key man insurance protects each partner. Upon the death of a firm’s partner the other partner(s) usually need to purchase the shares of the business from the deceased’s family. Insurance lets this be handled smoothly with the correct buy-sell agreements in place.

Income protection insurance
If someone is unable to work, income protection insurance protects them by paying their salaries.

Many business partnerships make it part of the partnership agreement that all the partners have income protection insurance. This is because the partners share the firm’s profits, and having income protection insurance in place for a partner who is unable to work means that profits are not diluted by the non-working partner drawing a salary from the business.

Business interruption insurance
This provides cover for loss of income, payroll and an increase in costs following a reduction in turnover or revenue caused by fire damage.

Workers’ compensation
Businesses with staff also need to register with Work Cover, statutory and state-based authorities that govern workers’ compensation.