With bushfires burning around the country, it’s important for homeowners in fire-prone areas to take steps to ensure they have the right insurance in place.
This article from the Steadfast online magazine Well Covered, discusses risks of underinsurance, how to avoid mistakes and ensure homeowners have the right insurance in place, particularly in fire-prone areas.
All business owners have a lot of challenges, but many fail to contemplate what might happen if their business is suddenly unable to trade. From illness or injury to a fire at your supplier’s warehouse, there are many ways that your profit generation could be suddenly halted. While there are many rewards to being a business owner, the threat of the unexpected should not be overlooked. One of the most effective ways of keeping yourself and your business safe is through Business Income Protection Insurance. While many people have personal income protection, income protection for business owners is a much more focused form of coverage that could keep you much more safeguarded against the unexpected.
Disruption to your workflow can be caused by many uncontrollable events. Business Income Insurance policies are intended to cover your living and working costs while you are unable to trade. Whether you are forced to close your business due to long-term disruption or need to cease trading temporarily, Business Income Protection can make sure that when you are able to reopen the doors you will be in a much more secure position. When work is disrupted, business owners still have bills to pay, staff wages, and supplier costs that need to be maintained. And that can be very challenging if you are not generating any profits.
If there was any damage caused to your business premises, such as a fire or a flood, would your current finances keep you afloat? Any kind of damage, disaster, or business interruption can have a dramatic effect on a business. Without the reliability of ongoing profits, many business owners simply lack the resources needed to stay financially secure during unexpected breaks in trading. Business Income Insurance is intended to keep you financially stable as you tackle disruption, and can be a useful resource when you’re trying to get your business back up and running to pre-disaster levels.
Income Protection Insurance can cover individuals or businesses, but research in 2016 revealed that only 31% of Australians have their income protected.
Research by the Australian Centre for Business Growth suggests that 13% of Australian SMEs fail due to external factors such as natural disasters, changes to regulations, or even shifts in global trends. However, the actual number may be much higher than this.
Income Protection Insurance is not a new type of coverage. In fact, the first recorded policy that was designed to protect income was back in 1880!
Most Business Income Protection policies will vary according to your needs. However, you can expect that your policy will cover:
Generally, Business Income Protection will not cover you if your business is harmed by you intentionally, particularly in cases where damage was caused by intoxication. You will also find that most policies will only cover your costs if your business suffers a loss or inability to trade as a direct result of a specific disruption.
Businesses exist to make a profit. If a business is unable to make money due to any kind of external factors that are out of the owner’s control, having Income Protection can give you the financial safety net that you need to recover and continue trading.
There are countless circumstances that may have a negative effect on your business, many of which are impossible to predict. The good news is that it is possible to prepare for any eventuality, thereby safeguarding your business from potential financial ruin. The best way to do this is with the right business insurance.
However, as a business owner, what specific types of business insurance are you responsible for? What insurance are you required to have by law? Furthermore, which types of insurance are worthwhile considering despite not being mandatory? Let’s find out.
If your business has any employees, then workers’ compensation is a must. Essentially, it is a type of accident insurance paid for by employers which provides coverage should an employee be injured on the job. The insurance will pay for medical-related costs and will provide wage-loss compensation in the event that the employee is unable to work for a period of time following the accident/injury. Workers’ compensation also applies to circumstances when an employee contracts a work-related illness. Workers’ compensation is solely the employer’s responsibility – there are no deductions made from the employees’ salaries in order to pay for it.
Public liability insurance, although mostly optional, is required by law for certain types of businesses in Australia. In essence, it protects your business from financial ruin should you or your employees ever be accused of negligence. It may offer cover in the following situations:
This type of insurance is required by law, but only if you own a motor vehicle or a business vehicle. Many business owners will be pleased to discover that third party personal injury insurance is often included in their vehicle registration fee. Ultimately, it provides cover for any costs relating to injuries that a motorist may cause to others in a motor vehicle crash anywhere in Australia. Most third party personal injury insurance will cover treatment, care and support of the injured parties, pay for claims management expenses, and settle worries regarding both past and future economic loss in relation to the injury.
In order to remain compliant, all Australian business owners must make sure that they have invested in the right insurance as per the law. Remember, however, while there are specific types of business insurance that every employer is responsible for, there are many other types that are not mandatory, but that can greatly benefit your establishment in the long run including professional indemnity insurance, cyber liability insurance and stock and asset insurance. It is worthwhile to consider all of these types of insurance if you are in search of total peace of mind that your business is properly protected and ready to face any challenge that may come its way.
Australians are increasingly working from home, with the most recent data from the Australian Bureau of Statistics indicating at least a third of us choose to work from home at least part of the time.
A study by future trends research house McCrindle shows there are lots of different reasons why people work from home. In total, 45 per cent of Australians want the flexibility to juggle other things while working, while 25 per cent of us want a better work/life balance. Additionally, 15 per cent want to work without distractions and 12 per cent want the freedom to also look after children while working.
There are also many different models when it comes to working from home. Some people run their own businesses. Others have negotiated to work from home with an employer part-time. Another group works for an employer full time from their home.
Whichever model someone falls under, there are lots of different insurance implications when people choose to work from home. Here, Michael White, who is Steadfast’s broker technical manager, explains what some of those are.
“Home and contents policies do provide some cover for people who work from home, although it’s usually limited to the assets you’re using to do the work. Usually, a computer is the main asset and this is typically covered by your home policy, with a limit of about $10,000,” he explains.
As a result, it’s important to make sure the cover limit in your insurance policy on the assets you use to conduct work from home is adequate.
Says White: “In contrast to a commercial insurance policy, which may be negotiated, this is not the case with home and contents policies, whose limits cannot be negotiated.”
For instance, if your insurer provides cover for a home computer with a value of up to $10,000, you won’t necessarily be able to negotiate for a higher cover level of, say $20,000, even if you have business assets to this value. This has implications for businesses that operate a business with a higher value of assets from their home.
Let’s says someone is running a hairdressing salon from the basement of their home. The home and contents insurance policy won’t necessarily provide cover for expensive equipment such as chairs and basins above the limits specified in the policy. If this is the case, the business owner may look into buying a business pack insurance policy, which may provide more comprehensive cover.
Also, while they include limited cover for the tools of the trade, home and contents insurance policies won’t cover personal and professional liability.
“So, if people are operating a business from home, they need to take out a separate liability cover for that business,” White explains.
In general, White stresses it’s essential to first ensure if you’re working at home, you do have a home and contents policy that will provide cover for assets such as the computer on which you conduct the business.
In addition to that you need to make sure you’ve got liability cover. This will provide protection in the event that, for instance, a courier delivers a document to your home and trips and has an accident while making the delivery.
Important note – This article is provided by Steadfast.
The information provided here is general advice only and has been prepared without taking in account your objectives, financial situation or needs. Steadfast Group Ltd (ABN 98 073 659 677, AFSL 254928)
Telematics technology has proven benefits when it comes to encouraging more responsible driving, with research indicating better driver behaviour is one of the main advantages in using this innovation.
Black box or telematics technology is a way for businesses to collect data on how their employees are using company vehicles. Using telematics, businesses can collect information such as whether drivers are speeding or driving dangerously, as well as how long they spend on the road. This is important, as research indicates driver fatigue is one of the main causes of road accidents.
According to the most recent Telematics Benchmark report, improved driver behaviour, peace of mind and regulatory benefits are some of main pluses to using telematics. The research found when drivers use telematics devices, businesses achieve peace of mind knowing where their vehicles are on the road and can also plot more efficient routes, leading to reduced costs such as lower fuel bills.
Importantly, data shows businesses that use telematics can improve the safe driving record of their vehicles. Mercurien Insurance specialises in providing insurance to businesses that use tools such as telematics to manage their fleet of vehicles. One of its clients, a not-for-profit organisation with a vehicle fleet, saw speeding events per kilometre drop from 0.14 to 0.07 across two-and-a-half years. Additionally, at fault claims fell from just over 60 to just over 20 a year thanks to telematics.
As this shows, businesses that use telematics may experience a commensurate improvement in driver safety. As a result, some insurers look favourably on businesses that employ telematics in their vehicles.
Businesses collect the data and may provide it to some insurers, who then use it to make decisions on the policy and its conditions. Insurers may approve more favourable policies, including more cost-effective premiums, based on data showing better driver safety.
Turning to the public sector, the National Transport Commission is reviewing how telematics is used across the transport industry, especially among vehicles that are required to comply with the Heavy Vehicle National Law, as well as vehicles that are required by law to use telematics, such as taxis and buses.
Michael White, Steadfast’s Broker Technical Manager, explains telematics may be used by businesses to better manage how their fleets are operated and to also provide this information to their insurer.
“In the case of heavy motor vehicles, telematics can provide information on how the vehicle is being driven, speeds, how brakes are used and whether drivers comply with road rules,” he says.
Zurich Motor Fleet Underwriting and Risk Engineering is one insurer that has a telematics-based insurance policy. Zurich Fleet Intelligence (ZFI) uses telematics data gathered from its policyholders vehicles through black box technology. Subsequently, Zurich uses this information when assessing insurance policy applications and claims.
Often, Zurich’s clients already have devices in place in vehicles so they can monitor vehicles for logistics purposes. ZFI can draw on this data to assess how individual drivers behave when they are on the road. The technology also provides information to drivers about their driving performance, online and in real time.
However, another insurer, QBE, has exited the market, closing its Insurance Box product it launched in 2014. This technology provided people with a Drive Score and helped them become better drivers, by providing feedback on driving habits and tips on how to improve driving performance. It was the first product of its kind in Australia but will no longer be offered as a standalone product.
Despite QBE streamlining its telematics offering, this technology is likely to become more popular with insurers, businesses and regulators as it becomes more sophisticated over time.
Important note – This article is provided by Steadfast.
The information provided here is general advice only and has been prepared without taking in account your objectives, financial situation or needs. Steadfast Group Ltd (ABN 98 073 659 677, AFSL 254928)
If you’ve scrimped and saved in the hopes of achieving financial security through an investment property it makes sense to insure such a valuable asset.
It’s no secret that Australians are among the most real-estate obsessed people in the world.
Around two million Australians own an investment property. A disproportionate number of these people have their own business. They are typically hoping to set themselves up financially through what they see as a safe, easy to understand investment (and perhaps reduce their tax through negative gearing).
Buying property might be less complicated than attempting to play the stock market, but all investments have the potential to end in tears. Ian Mabbutt, the Head of Personal Lines at Steadfast Underwriting Agencies, explains why it’s a good idea for investment property owners to make sure they have the right landlord insurance.
What is landlord insurance?
“Landlord insurance is the home and contents insurance you take out on a property you own but rent out rather than live in,” Ian says. “It’s a policy that will cover you for most things – public liability, storm damage, fire, theft and so on. That noted, these policies don’t cover wear and tear. Also, if owners want to be covered for loss of rental income they need to choose – and pay extra for – the rent-cover option. Loss of rental income is the biggest issue owners face but rent cover isn’t standard on landlord insurance policies.”
Read the full Steadfast article here.
Many Australians, especially those who own businesses, discover they don’t have the cover they need in the worst possible circumstances.
Insurance is one of those subjects that many people glaze over. So, just to test how knowledgeable you are about this important but unsexy topic, see how many of the following you can answer.
Answers:
If you failed to get all (or any) of the answers right, you can take solace in being a typical Aussie. Survey after survey has shown that Australians don’t have a good grasp on what insurance policies might be relevant to them. Unsurprisingly, Australia is one of the most underinsured nations in the developed world (underinsurance is when an individual or business has no or inadequate insurance to cover their legal liabilities, or the cost of loss or damage to their assets).
The Insurance Council of Australia’s 2015 report on non-insurance in the SME sector showed a non-insurance rate of 12.8 per cent. Paul Nielsen, director and chair of the Council of Small Business Australia (COSBOA), says many SMEs are in denial. “Business owners tend to think it won’t happen to them. Because of this, some SMEs view insurance as dead money,” he says.
Read the full Steadfast article here.
Offbeat, unusual claims that cross insurers desk‘s everyday!
SPLASH OF PAINT
Unrestrained items in the back of a vehicle can cause more damage than a collision. The claimant driver of a car had a minor collision resulting in tins of paint on the back seat moving freely around the inside of the vehicle, flipping their lids and coating the upholstery with an attractive but unwanted colour scheme. The cost of replacement of the interior resulted in the car being uneconomical to repair.
Outcome: Car written off. Claim accepted.
PLASTERED!
Dinner at home was an interesting occasion for one family when parts of the ceiling fell in on them. It seems that the glue holding the plasterboard ceilings in their older home did not have a lifetime serviceability.
When their house was built, ceilings were held in place by both screws and glue and if there was a shortage of screws, the ceiling fixing would rely on the glue, which can deteriorate over time.
Generally, unless there has been a contributing factor e.g. water ingress, these repairs tend to be excluded under ‘wear and tear’ gradual deterioration exclusions.
Outcome: Claim rejected.
UNBROKEN… BUT REPLACED ANYWAY
With the recent replacement of many hail damaged roofs in the Brisbane area, it is interesting to note that whilst many solar panels survived the impact of the hail, some had to be replaced anyway because were not fire rated.
Outcome: Claim accepted.
Weather Events Demand a Closer Look
Following on from the previous article in the last edition of Brokerwise, we continue to focus on the impact of Co-Insurance or “Underinsurance” as it is more commonly known.
The importance of considering and selecting appropriate and adequate Insurance Policy Limits or sub limits of liability are paramount and should always take into account any possible ‘Underinsurance’ potential impact.
The latest weather perils that have impacted Queensland and Australia generally over the past few months highlight the need to look at various points that require consideration. These are:
Point 1: There have now been changes to both State and Federal Laws regarding the required ‘wind rating’ of roller doors used in commercial buildings. Following the various cyclones and storms, insured clients discovered that because they had ‘old’ roller doors that didn’t comply with the new building laws, they didn’t have an adequate sum insured to pay for replacement with new ‘legally compliant’ doors.
Point 2: Both local and imported building materials have risen in cost due to demand after the various weather events. As such, insured clients have experienced first hand the impact of not ‘setting’ an adequate Sum Insured only to find that they were sometimes grossly underinsured, and as such, had claim payments and settlements considerably reduced. Consideration also needs to be given to both the a) extra time and b) extra costs related to imported materials.
Point 3: In this scenario, the Removal of Debris limit becomes applicable. As there are many buildings that still have varying degrees of asbestos sheeting or materials as part of their overall construction there is large cost associated with both the a) removal of debris (following an Insured loss) and b) the replacement of the damaged area. Further, there can be a ‘flow on’ effect where Increased Cost of Working Policy sub limits may also be required to be utilised following this kind of loss.
Your insurance broker can advise on policy coverage and adequate Limits of Liability required for your circumstances. Following your broker’s advice will result in better outcomes during the claims process.
Don’t Cancel Your Cover
The business has closed, it’s no longer trading, no more parts or products being manufactured or imported. No more installations or maintenance. No goods for sale.
So, time for retirement or a change in direction. We just need to cancel the insurance.
Well, not exactly. There is an element of insurance risk for a business once they have ceased trading. For a tradesman it would be the work they have installed and maintained which may cause an incident at a later date. An example would be a switchboard that causes a fire due to faulty wiring. The loss may cause subsequent damage to a building or worst case, death or injury. The time of loss is determined to be the occurrence date, therefore cover may have existed when the switchboard was installed but it should have still been in force when the incident occurred.
For the manufacturer of goods, their products may be discontinued but the element of risk remains if they cause damage or injury at a later date. So how long do you maintain run off cover?
Ideally, up to seven years is the industry standard. But not all businesses need cover for that long. For example, a restaurant would know within days or weeks of potential claims rather than years. Various States have their own legislation requirements and these would need to be addressed to clarify your situation.
Examples of run off cover for classes of insurance would include Public and Products Liability / Professional Indemnity / Directors & Officers Liability (Management Liability). Advice from your broker should be sought in these cases as to which basis of wording applies and any interruption to cover should be avoided so a claim won’t be jeopardised.
When a business is sold, the risk of potential future claims may be transferred to the new owner but this can’t be assumed, it would be negotiated and details of the sale would need to be reviewed with legal opinion.
The good news regarding run off cover is that it does get cheaper year after year due to decreasing exposure, subject to no claims activity. You can also negotiate a number of years up front with an insurer. This is suggested if a sale of the business occurs or retirement beckons. Be sure to get both legal and insurance advice for peace of mind. You can then close the door with confidence.
