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.
High risk of sub standard products
In recent weeks the news media in Australia has reported many examples of inferior products being used in the building industry. The reports document the use of non-compliant products, such as cladding, cabling, wiring and lighting being installed in domestic and commercial buildings. Some suspect installations have resulted in serious damage with ongoing fire investigations but all products reviewed by authorities have been exposed as potential risks to either cause fire or act as an accelerant.
Trends in consumerism is to make a product cheaply for a shorter shelf life knowing it can be replaced cheaply in a ‘buy and replace’ purchase cycle. For building products however, we also want the assurance that our houses are long term secure in their construction and internal fit-out.
The cause of these building material risks can be traced back in some cases to inferior products being imported that are not meeting Australian Quality Control measures. An added problem is that designs are specified with materials which are then replaced with a replication of the intended original material or product. In a lean economy the temptation exists to look for cheaper alternatives to combat narrow profit margins.
This may also muddy the water with the rating of insurance premiums. Property risks are calculated on the materials of construction so it does have a bearing if the materials are combustible, mixed or of inferior construction. This must be assessed, declared accurately and obviously, if a fire risk is increased, it must be addressed.
Australia’s reliance on offshore manufacturing has caused the transfer of responsibility to manufacturers with various importers and distributors proving difficult to supervise and monitor to appropriate standards.
The manufacturer / importer has a responsibility not only as a measure
to sustain a reputable business, but also as a community responsibility to put stringent measures in place which would prevent property loss and worst case scenarios.
Industry and Australian Standards exist and have individual rating codes for applicable products. The importer must have a testing protocol and recall procedure that can be demonstrated. Associations such as Master Builders, Master Electricians, Housing Industry Association etc., also provide a forum for the members and the public to highlight issues and all are proactive in raising concerns and bringing problem cases to light.
The risk exposure would also be assisted by having adequate Product Recall insurance to cover incurred costs which are not limited to the product, but may also include advertising, recall notifications, repairs, loss of profits and rehabilitation.
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.
New rating system launched
Following the ‘Black Saturday’ and ‘Blue Mountains’ bushfires in recent years, the Australian Government in conjunction with local councils and fire services, has amended the requirements set out in Australian Standard 3959 – Construction of Buildings in Bushfire Prone Areas.
A Bushfire Attack Level (commonly known as BAL) Rating has now been applied to all domestic buildings located within 100 metres of bushland vegetation.
The BAL Ratings that have been assigned (from lowest to highest) are:
1. BAL – LOW
2. BAL – 12.5
3. BAL – 19
4. BAL – 29
5. BAL – 40
6. BAL – FZ (Flame Zone)
These ratings are based on factors such as the region where you live, the vegetation type around your property, the distance from your home to individual vegetation types, and the slope of the property.
This means that if your property now has a BAL Rating applied to it, then the costs to repair or rebuild your property have increased, sometimes dramatically, to now comply with the new amended Australia Standard laws. The additional costs are not strictly limited to fire damage only, but also apply to all claims affecting the external components of the building such as roof, walls, gutters, eaves, windows, doors, decks etc. So if your property suffers damage through events such storm, hail, impact, accidental damage etc. then the repair costs will be impacted by the BAL Rating.
So what does this mean for insurance? Depending on the BAL Rating applicable to your property, the additional costs associated with the rectification of damage caused to your property, be it by fire, storm, impact, etc. need to be included within your Building Sum Insured and not be exhausted under your insurance policy.
The Building Sum Insured nominated on your insurance policy now needs to be increased to include these additional costs otherwise it will result in under-insurance leaving you with either an unfinished home or personal financial contribution (outside insurance) to complete the repair or rebuild of your property.
The recommended additional costs have been set at:
1. BAL – LOW
No additional cost
2. BAL – 12.5
Additional $5,000 – $15,000
3. BAL – 19
Additional $20,000 – $30,000
4. BAL – 29
Additional $30,000 – $50,000
5. BAL – 40
Additional $50,000 – $80,000
6. BAL – FZ (Flame Zone)
Additional $100,000 – $120,000
In order to determine the BAL Rating applicable to your property, please contact your local council who will be able to provide you with this information. Once obtained, a calculation can be provided for the average additional costs that should be included in your building sum insured and added to your insurance policy to ensure you are adequately protected in the event of a loss.
If you would like more information regarding BAL Ratings, please contact your CQIB broker.
