Five things to remember before taking out a business insurance pack

Aon

The term “business insurance” may be familiar. It can either refer to any policy that covers a business, or, more commonly, it refers to a package that covers businesses and their assets against events like fires, storms and theft. This second policy is called a Business Insurance Pack, and has the following five important elements to ensure there are no gaps in cover.

1A Packaged Insurance Policy A Business Insurance Pack is a packaged policy that generally has various sections to cover different business needs. It is important to understand these sections to ensure a business has the right cover. For example, a policy may cover contents, but unless there is also cover for theft, the contents will not be covered if they are stolen from business premises. It is therefore important not to assume what the policy includes. More information can be found by scanning the QR code at the end of this article. 2New Replacement Value A Business Insurance Pack requires a nominated sum insured, which is the amount for which assets will be covered. This can also be called a limit of liability, and may need to reflect new replacement value. This means the sum insured must equal the cost to replace all business contents with brand new items that have a similar function, output and construction to those damaged or lost, or to rebuild a building from scratch. Failure to nominate the correct sum may mean the business is underinsured in the event of a claim.

3Underinsurance Underinsurance occurs when assets are covered for less than the amount required to replace them. If something happens to equipment or buildings, and the business insurance policy does not cover the full cost to repair or replace them, there may be out-of-pocket expenses. It is a misconception that underinsurance only occurs during a total loss claim, like when a building burns down. For example, if some equipment is destroyed in a storm, but the business is underinsured, the replacement cover may be reduced. To prevent underinsurance, Aon recommends an insurance valuation of assets. Unlike a bank valuation, an insurance valuation considers matters like property access, escalating costs in the event of a natural disaster, and the products from which a building is constructed (like asbestos, which may cost extra to remove).

4Business Interruption A key feature of a Business Insurance Pack is covering lost revenue in the time it takes to repair or replace assets after

an insured event. For example, if a severe storm damages crucial equipment and the business is unable to operate, the policy will cover lost revenue for the prescribed indemnity period (the maximum amount of time for which lost revenue will be covered until the equipment is repaired or replaced). For business interruption cover to apply, the assets and event that caused the damage must also be included in the policy.

5Public and Products Liability A Business Insurance Pack can also cover public liability against claims that a business caused personal injury or property damage. Most brokers and insurers offer stand-alone Public and Products Liability Insurance, however it is important to determine whether it is also needed as part of a Business Insurance Pack.

Given the nature of Business Insurance Packs, the process of taking out a policy can be time-consuming and confusing. Most standard applications involve various questions on all kinds of risk – even if they are not relevant to a particular business. That is why Aon is developing an efficient way to buy cover for health professionals, with three pre-selected online options designed to suit the most common business needs in the industry.

The information contained in this article is general in nature and should not be relied on as advice (personal or otherwise) because your personal needs, objectives and financial situation have not been considered. Before deciding whether a particular product is right for you, please consider your personal circumstances, as well as any applicable Product Disclosure Statement, Target Market Determination and full policy terms and conditions, available from Aon on request. All representations in this article in relation to the insurance products we arrange are subject to the full terms and conditions of the relevant policy.

Health Professionals Business Insurance is arranged by Aon Risk Services Australia Limited ABN 17 000 434 720 AFSL 241141 (Aon) under a binder agreement on behalf of the underwriter, Zurich Australian Insurance Limited (ZAIL) ABN 13 000 296 640 AFSL 232507. When acting under a binder, we will be acting as agent of the insurer and not as your agent. Our binder arrangements with the insurer are such that we remain your agent in the handling of any claim. If you purchase this insurance, Aon will receive a commission that is a percentage of the premium. Further information can be found in our FSG or provided upon request.

References can be viewed by scanning the QR code