Business Insurance Law in Australia
Do you own a business in Australia? It’s likely that when your business started, and up to today, it is your livelihood that you’ve put at stake. You put up your own money, you staked loans on your assets, and you’ve taken all the risk to ensure that your business succeeds.
Business insurance is your way to manage the risks associated with your business and protect property, equipment, and machinery that you need to stay in business when the unexpected happens. And business insurance isn’t just available to protect your assets either. Business insurance financial support in cases of natural disaster that can help with temporary relocation, lost profits, fixed expense, rebuilding, and in some cases re-startup costs such as marketing and public relations.
Different businesses require different policies to protect against loss of assets, legal liability, unexpected business losses, and many other events. So, whether you are a small business, a tradesman, professional, or independent contractor, the question to ask yourself is, can my business recover from large unexpected financial loss?
What is Business Insurance Law
Businesses come in all types of sizes from single-owner operator to massive corporations with tens of thousands of employees. Due to the range of business needs, operation costs, assets, and other diversity business insurance law is complex.
Business insurance law is collection of laws and regulations that relate to insurance. Insurance is a multi-party contract that transfers the risk of loss to one party in exchange for a fee. Business insurance laws and regulations manage insurance contracts, how they are created, written, and enforced.
A business insurance lawyer acts in all insurance contract capacities from research and evaluation of needs, to writing, evaluating the policy upon a claim, and aiding in the enforcement of the insurance policy and governing laws and regulations.
Types of Business Insurance Laws
In Australia there are two compulsory business insurance laws that most businesses must have. Beyond compulsory insurance laws policies can be customised to accommodate your business needs. Customisations are often purchased as an add-on insurance to protect your business, or commonly in a pre-bundled insurance package by the insurer.
Compulsory business insurance
If your business has employees, worker’s compensation laws protect employees in the event of a workplace accident or sickness. In Australia worker’s compensation laws are operated at the state and territory levels. While each jurisdiction has varying laws, some worker’s compensation laws are required throughout Australia:
• Worker’s compensation laws require policies for all workers who are remunerated regardless of whether your business agreement is written, oral, or implied.
• Premium costs of policies are determined by industry classification and employee remuneration.
• Large businesses with the ability to administer their own worker’s compensation plans through self-insurance is an allowable option.
• Interstate workers are covered by either the state or territory they work or covered by a policy from the state an employer is registered.
Workers compensation is one of the most well-known types of insurance that businesses and workers are aware, however, the law is often misunderstood. Some of the misunderstood coverage that is included in worker’s compensation is:
• Regarding breaks, worker’s compensation will cover all on-site employees in all states. However, in TAS workers are usually not covered unless under certain conditions. In SA, off-site breaks are not covered by worker’s compensation.
• Regarding daily commutes to and from work, ACT is the only state where workers are covered during commute. Remaining states may cover workers in certain circumstances, though states such as Victoria worker’s compensation does not cover commutes.
• Outside of the workplace, workers may still make claims for injury and illness as long as the job is a significant contributing factor.
• All states cover work-related travel, though Victoria has stricter provisions.
Worker’s compensation misunderstanding is more often circulating around what worker’s compensation won’t cover. While there are several exclusions, in general, workers compensation policies won’t cover an employee’s intended neglect or harm. Examples of what workers compensation won’t cover are:
• Serious and willful employee misconduct
• Self-inflicted injuries
• If an employee provides false information
• Psychological injuries resulting from reasonable employer actions such as if an employee is terminated, demoted, promoted, or disciplined.
Compulsory third party
If your business requires the operation of a vehicle compulsory third party insurance covers your business for claims against your business due to personal injury. Compulsory third party insurance is a requirement of registering and operating a vehicle in Australia.
Much like workers’ compensation, third party insurance laws and regulations are dictated by the individual states and territories.
Other types of business insurance
In addition to the two Australia-wide compulsory types of business insurance there are several types of add-on, bundled, and additional types of insurance policies. Due to the diversity of businesses and business operation it is important that businesses are able to customise policies to fit their needs. Some of these other types of business insurance policies include:
Professional indemnity: Legal, accounting, real estate, and investment businesses offer expertise and knowledge that can result in client loss. Indemnity insurance protects your company from legal action against you if someone suffers loss due to your professional advice or services.
Property: Property insurance protects your business from damage or losses to physical property, assets, or stock due to insured events or accidental damage.
Public liability: Public liability policies cover legal and compensation costs your business might be responsible for when found liable due to caused death or injury, property loss or damage, or economic loss due to your negligence.
Theft: Theft insurance covers your business against loss or damage to stock and contents due to force or deception.
Money: Money insurance is often bundled with theft, as theft insurance covers most of your contents and stock, not including cash. Money insurance will cover theft of money at premises, in transit, and at your private residence.
Commercial Vehicle: Commercial vehicle insurance can be broken down into several specialised options such as: comprehensive, third party property damage, and third party fire and theft.
Tax audit: Tax audit insurance covers costs your business incurs by your accountant or registered tax agent upon notification by the Australian Tax Office that you must conduct an audit or investigation into you business tax liability.
Business interruption: Business interruption insurance is often an add-on insurance that protects your business from operation, property, and profit losses due to disaster. This insurance may cover temporary relocation, rebuilding, and re-startup costs such as advertising, marketing, and public relations.
Stock deterioration: Deterioration of stock is coverage often used by restaurants, and storage facilities. Coverage includes deterioration of goods if a freezer or refrigerator breaks down.
Glass: Glass coverage covers costs associated with replacement of broken external or internal glass including glass items.
Employee fraud or dishonesty: Employee fraud or dishonesty insurance covers fraudulent and dishonest actions committed by employees that results in the loss of money, negotiable instruments, or goods.
Machinery/equipment breakdown: Machinery and equipment breakdown often has several coverage options, but in general this insurance will cover the machinery and equipment in your business, and sometimes stock that is damages due to your equipment breakdown.
Goods/property in transit: This insurance covers the loss or damage to goods and property (tools and equipment) that your business buys, sells, or uses when in transit by road, rail, air, and sea.
Computer and electronic equipment: Computer and electronic equipment insurance covers accidental damage or loss to computers, electronic equipment, and data.
Cyber liability: Cyber liability insurance protects your business from digital and online risks such as fraud and data breaches.
Business insurance law and your business
Business insurance law is important to businesses both in the protection of your legal business needs and protections as well as helping you develop a business insurance plan to protect you from a multitude of potential legal issues, property, asset and profit loss.
When determining what policy coverage your business needs, there are several things to consider in regard to your business and how it operates.
• Do you have employees?
• Do you manufacture goods sold to the public?
• Does your business serve customers such as a coffee shop or restaurant?
• Does your business provide advice such as law firms, accounting firms, or medical clinics?
• Do you have items such as machinery, equipment, and other assets that need specific financial protection if lost or damaged?
• Do you have a brick and mortar or digital business?
Evaluating potential losses and damages including physical, digital, and monies as well as how your business operates, provides services, and is organised will aid you in understanding the policies and customisable coverages important to your business.
Business insurance law is here to protect your business from unexpected loss and damage that would otherwise put you out of business. No one wants to experience events such as natural disasters, injury or death, theft, or legal claims. Understanding the challenges that your business faces is key to creating business insurance policies that protect your business. Understanding Business insurance law will not only protect you, but also help when disaster or the unexpected hits.