New players in the insurance space may appear to give small business owners more choice, but how can you be sure that your business is adequately protected?
The insurance industry has evolved significantly over the last decade. Now, small business owners can choose whether they want to meet a broker face to face to discuss their needs, order an insurance policy online or even pick up a policy while going through the supermarket check-out.

Aggregator sites have also commoditised business insurance, allowing customers to think they can conveniently compare prices on insurance products and buy cover online.

But just how effective are these off-the-shelf insurance packages, and will they really protect your small business when you need it most?

The temptation to purchase an insurance product without meeting with an insurance broker is driven by increasing demand from consumers for simple and affordable insurance cover.

And while we all want convenience, just how effective are these off-the-shelf insurance packages, and will they really protect your small business when you need it most?

While the rationale is saving money, it can be a false economy if the insurance cover turns out to be too generic and fails to adequately cover you in an emergency.

The fact is that small business owners often require tailored insurance policies written specifically for their business to provide the protection they require, when they need it most.

This is where using an insurance broker can pay for itself.

This is where using an insurance broker can pay for itself. “We think there are four clear areas where an insurance broker demonstrates its value proposition,” says Dallas Booth, chief executive of the National Insurance Brokers Association (NIBA).

“First, they sit down with the business owner to get to know the business and its quirks. Second, they identify the business’ risks, what could go wrong, in some cases, these risks are those which that the business didn’t even know it had. They also take those risks to the market and source the most appropriate cover. And if the business has to make a claim, the broker becomes their advocate in the claims process,” says Booth.

For instance, one of the biggest gaps in the insurance of Australia’s one-million-plus small business owners is business interruption insurance, which is designed to protect the business’ revenue from damage to the property that generates it. “Business interruption insurance is like income protection for a business, yet only one in four Australian small businesses have it – meaning many small businesses are leaving themselves exposed.“If your shop burns down, you’re going to lose customers and income, but you will still need to pay wages. Business interruption insurance is designed to cover the loss of revenue while you’re unable to trade. That’s certainly one of the things that an insurance broker is going to suggest,” says Booth

Overlooking the importance of adequate insurance cover until it’s too late is all too common. In fact, 26% of small business owners don’t have any form of general insurance, according to the Insurance Council of Australia. The national survey from a few years ago also found that of the SMEs that purchase general insurance, 94% indicated they considered that they were adequately insured. Taken together with the rate of non-insurance, this means that under two thirds of all SMEs have adequate insurance.

Booth advocates for the importance of forging a relationship with a broker you can trust.

Booth advocates for the importance of forging a relationship with a broker you can trust. They can suggest adequate cover you might not have even considered, such as management liability insurance and cover against cybercrime risk and data loss – cover that protects against cyber events such as identity fraud and security hacks.

The cyber risks are something that not many businesses think about, but that sort of event is a lot more frequent these days, so businesses need to ensure this is considered,” says Booth.

“Similarly, in the management liability sphere, there’s a need to broaden the directors’ and officers’ insurance, which protects company directors and officers against personal financial risks. This is because claims by employees for things like wrongful dismissal and discrimination are on the rise, says Booth.

“You’ve also got to protect against consequences of poor or inappropriate behaviour by employees. It’s a given that society is becoming more litigious about things of this nature, but still, most small businesses don’t think about it when putting their insurance cover in place. An insurance broker will think about it,” he says.

So make sure you commit some time to understanding business insurance policies that are right for you. After all, insurance is not an expense that you can afford to cut corners, but rather it’s one of those areas where you need to take the time to assess and seek advice a broker you can trust.

Steadfast brokers together form Australia and New Zealand’s largest network of general insurance brokers and are well positioned to offer advice specific to your business needs.

To find an insurance broker, visit steadfast.com.au