Why small businesses use an insurance broker

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Small business owners tend to be born optimists with little inclination to think about what could go wrong. That’s why it pays to have an insurance broker in your corner to safeguard what you’ve worked for.

Paul Harrison’s family-owned shoe shop in Sydney’s Neutral Bay has operated out of various locations for more than half a century. It’s used insurance brokers for the past 35 years.

“When I came on board, we already had insurance but not at the level we needed,” says Harrison. “Most of the insurance we had was good, but it took time. If we made a claim, an assessor would come along; then he’d send you forms to fill out before repairs could begin. All that time you’re not trading.”

Save yourself time

Anyone who has compared car, home or health insurance policies to try to find the best deal knows how time consuming it can be. Choosing a business insurance package is even more complex because of the range of risks requiring cover.

A business insurance broker will not only save you time sourcing the right policy, they can also save time and money if you need to make a claim.

That was Harrison’s recent experience with his long standing Steadfast insurance broker.

“We had a leakage from the residential unit above our premises that ruined our ceiling, stock and floor. With rent and wages to pay, you can’t afford to be out of business for two months. Our business insurance broker was onto it straight away. We were able to replace our flooring within two days and probably missed five days’ trading in all”.

Utilise your business insurance broker’s experience

Small business owners are great at what they do, whether it’s running a café or a consultancy. But they are rarely insurance experts. “What they may not understand is the broad range of risks they face,” says Dallas Booth, chief executive of the National Insurance Brokers Association(NIBA).

A business insurance broker will help identify the risks your business faces, then get the insurance package that matches those risks. “There’s no point buying a business package off the shelf if it only covers some of your risks,” says Booth.

“I don’t think you can do that on your own. You may think you know what can go wrong but you never realise how much [an adverse event] impacts on your business going forward,” says Harrison.

Read the full Steadfast article here. 

High risk with sub-standard products

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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. 

Across the Claims Desk

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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.

Work Experience Liability

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Differences in Liability

When employers provide work experience to school age students and unemployed people there are distinct differences with liability issues between the two groups.

With school students the employer is normally indemnified by the school that the student attends, together with relevant State Government authorities indemnification, in respect of any injury sustained by the student during the course of work experience.

That situation isn’t the same when it comes to providing work experience to unemployed persons to help them gain future employment in the workforce. Authorities such as WorkCover Queensland specifically exclude coverage for ‘non paid’ employees, other than full time school students, under the employers normal WorkCover Queensland Policy.

Employers should advise their insurance broker of their work experience engagement practices so that the existing Broadform Liability Insurers are made aware of the circumstances and can extend their Policies accordingly to note the inclusion of unpaid labour.

Employers should also advise the ‘unpaid worker’ of the potential exposures should they suffer a workplace accident or incident that results in their own injury. Consideration should be given to other policy coverage.

Policies such as Personal Accident & Illness or a similar product may then indemnify the ‘unpaid worker’ against injury or illness.

In all cases it’s prudent for any insured person or business to advise their insurance broker of any material changes to their business operation so that
the Insurers are made fully aware and coverage can then be tailored accordingly. 

Trademark Infringed

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An Expensive Oversight

A small chocolatier based outside of Adelaide, Chocolate @ No. 5, has been forced to redesign its logo after multinational fashion giant Chanel claimed a trademark infringement of its perfume, Chanel No. 5.

Chanel disputed the use of ‘No. 5’ in the chocolatier’s logo when the chocolatier recently applied for a trademark registration. The chocolatier maintains that the number five in the logo refers to the number of its street address and is not used because of any potential connection to Chanel.

Chanel’s lawyers sent the chocolatier a ‘cease and desist’ letter demanding that the chocolatier withdraw its registration, ditch its logo and to rename the business if it was to move from its current address.  The chocolatier has since spent thousands of dollars changing the branding of the business in order to avoid a legal battle with the luxury retailer.

Amidst the many challenges entrepreneurs face when starting a business, it is not hard to see how many overlook the need to register their business name and branding as trademarks.  However, they can pay a high price for the oversight.

To ensure a new business has the best chance of success, entrepreneurs must be aware of what is involved.  As a starting point, they need to consider which business structure best suits their needs, apply for their Australian Business Number, check that their chosen business name is available and register their business name and branding as trademarks, preferably before the business commences trading to ensure interests of the enterprise are covered.

Large companies are often vigorous in protecting their trademarks and intellectual property and Chocolate @ No. 5 is not the only one to pay the price. There have been many instances of small companies being forced to relinquish their logos, business names and web domain names on the basis that they potentially infringe a large company’s trademark rights.

While it takes forethought and planning to address these risks from the beginning, the eventual payout is sweet.

Good Staff

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How Do You Keep Them?

The common misconception is that all you have to do is pay well. Many studies have found that this is simply not the case… in fact, it generally comes in around third or fourth on the employee list of ‘job satisfaction’ priorities. Paying a fair and reasonable salary is expected but of high priority is the need to provide a great company culture. What that really means is provide a great company atmosphere. Make it a happy place to be and strive to create a culture where everyone gets along and helps fellow employees – cultivate real team spirit. Also have a company-wide rule – ‘always do the right thing by our clients’. Maintain a positive ethos at all levels of the business and recognise the value of good humour.

Doing as much as you can to create a great atmosphere at work goes a long way to retaining quality staff.

On the relationship building and work side of things, here are more suggestions to help develop the desired culture in your business:

Get to know your staff: Although you need to be mindful of privacy considerations, try to find out what drives them…. different people have different triggers and finding out what they are will help in your relationship.

Develop their skills: Training is a critical factor, as it not only provides benefits for your business but also identifies a career path for them and can help develop their aspirations.

Engage them in the business: If people feel connected with the values and direction of the business, they will be comfortable putting forward their views. By having the opportunity to ‘have a say’, they see that their work and they themselves are important to the business. It takes appreciated, valued employees to ensure long-term success for any business.

Provide feedback: Not just the traditional annual Performance Review and measuring of KPI’s… it’s an ongoing position of providing feedback; positive and appreciative feedback when it’s due and swift course correction in areas that need improvement.

Remember, times change, so don’t expect to keep good staff forever. It’s unlikely that you will be able to offer the flow of opportunities that the really good ones will be seeking. But they will contribute their energy and passion while working with you, provided you fulfill your side of the relationship.