What is SME Business Insurance?

Any business in Australia, including small to medium-sized businesses, will benefit from an added layer of financial security in the form of an SME Business Insurance cover. This provides owners and businesses with protection against financial risks and the loss of key assets. It also protects customers, employees, suppliers, and contractors.

Some types of insurance are mandatory, like Workers' Compensation, Professional Indemnity, or CTP Insurance for motor vehicles – these are called statutory insurance covers. Other types of insurance are optional, but they are important ways of reducing business risk and protecting your finances and assets.

What does SME Business Insurance cover?

• Property Damage – cover ranges from fire, storm, lightning and other perils to any type of accidental loss or damage. The property insured includes damage to buildings, contents, stock, plant and equipment, raw materials, and consumer goods.
• Business Interruption – covers weekly amounts or net profit loss and ongoing fixed costs following property loss or damage. Also referred to as Loss of Profits or Consequential Loss Insurance.
• Burglary/Theft - covers break-in at the business premises and the damage is done, as well as theft of goods or stock;
• Money - covers theft of money in various locations (during transit, in a locked safe, or in a private residence) at any time (within and outside business hours). 
• Liability - covers a variety of statutory and civil legal liability, including personal injury and property damage, environmental liability, management liability, statutory liability, professional liability, aviation, marine and motor vehicle-related liability;
• General Property - covers specified portable property against accidental loss or damage once it is taken off the premises, within Australia or overseas; 
• Equipment - covers sudden internal derangement and accidental loss or damage to plant, equipment and machinery, as well as computer and other electronic equipment. Loss of stock and business interruption cover can also be part of this insurance. 
• Motor vehicle & mobile plant – covers registered and unregistered motor vehicles, mobile plant & equipment, farm equipment, construction plant, as well as attachments and trailers. This insurance can also cover loss of income, downtime and hire costs of replacement equipment. 

Speak to an insurance expert

It is our business to understand your objectives, needs, financial situation and risk profile and provide you and your business with tailored risk and insurance advice. 
This is how we work with your business:

1. We analyse your objectives, needs, financial situation and risk profile to develop appropriate strategies and solutions. 
2. With your input, we undertake risk assessments and conduct market research to determine the most suitable insurance product(s) for your key risk exposure. 
3. Your insurance adviser will present appropriate strategies and solutions and also negotiate and place insurance covers agreed.
    

Frequently Asked Questions

• How can insurance help small businesses in Australia? 
  • In Australia, small businesses are encouraged to invest in business insurance to help protect their business from costly eventualities like damage to property and liability claims. Investing in a comprehensive yet affordable insurance policy promotes the continuity of the business in times of losses or great financial trouble. 
• What does SME stand for? 
  Small-to-medium enterprises (SMEs) are businesses whose revenue, number of employees and assets do not exceed a certain threshold. Each country or industry defines a set of criteria to determine whether an organisation falls under the SME category.
• How can insurance help small entrepreneurs or SMEs, or how it relates to risk management? 
  Risk transfer is one of the treatment approaches in managing risks in business, and insurance is an example of risk transfer. It’s a strategy that SMEs employ to shift a risk or a liability from one party to another when that party specialises in managing a specific kind of risk/liability. 
• Why is insurance important for business owners? 
  Getting an insurance policy for your business is important, as it cushions or completely shields you from the hefty costs of certain unforeseen issues (accidents, damages to properties, effects of force), legal claims, and other liabilities. Without insurance, business owners might be forced to foot the bill out of their own pocket.

What is Cyber Insurance? 

During the 2020-21 financial year, the Australian Cyber Security Centre (ACSC) observed self-reported losses from cybercrime in Australia totalling a staggering $33 billion. Most businesses rely on technology to some extent, which means they’re exposed to increasingly sophisticated cybercriminals. According to the ACSC, an average of 164 cybercrime reports are made by Australians every day – that's about one report every 10 minutes.  

Cyber Insurance covers the physical loss or damage to information, IT systems and networks. It can also cover loss of profits to be business, caused by the introduction of malware, extortion or hacking, as well as management of the incident itself. 

Why is Cyber Insurance important?

Businesses must have guards against hackers and other types of cyber breaches. What’s more, because of stricter data privacy laws, they’re increasingly required to ensure personal information is secure. A breach will be investigated and require costly actions, including contacting hundreds or thousands of customers. There’s also the potential for hefty fines and penalties.

It’s easier to buy an insurance cover that protects your main cyber-related risks of damage to your systems and recovery, rather than trying to find specialist consultants to rebuild systems and keep the business operating. Cyber Insurance policies also generally include significant support with managing the incident, which can be essential when faced with reputational damage or regulatory enforcement.

What does Cyber Insurance cover?

There is a wide range of Cyber Insurance available. While all policies cover liability to third parties for passing on viruses, some also cover damage to your own networks. 

Additional sections that we recommend considering include:

• incident response – specialists to identify the issue and repair
• lost income and additional costs related to the incident
• data recovery and restoration
• consumer notification costs and ongoing monitoring costs
• legal defence costs
• cyber extortion management and fees
• crisis and PR management of the incident
• management of communications with regulators. 

Managing cyber risks to your business

Cyber Insurance is a key part of your management of cyber incidents and attacks. Many resources are available to help minimise the likelihood of a successful attack, including the Australian Cyber Security Centre. 

The top 3 things that you can do easily are:

1. Update your devices to protect information.
2. Set up multi-factor authentication for logging on.
3. Back up your data real-time of at least daily.

Explore your insurance options today. Talk to your professional insurance and risk adviser and get the best cover for you and your risks.

Frequently Asked Questions

What is not covered by Cyber Insurance? 

Like any insurance, not everything is covered by your policy. Some common exclusions include:

• personal injury
• consumer redress funds, unless specifically covered
• loss of money or securities, unless specifically covered
• your intentional conduct or wrongful use of personal information 
• failure to take reasonable care in securing your IT systems

Is Cyber Insurance required in Australia? 

Cyber Insurance can help you to manage your business's financial risks. While it isn’t mandatory in Australia, it is expected that certain businesses have some level of cover in place – including critical industries, care, finances and utilities. Without insurance, you would be forced to pay out of your own pocket for repair, recovery, and remediation costs from a cyber incident or attack.
 

What are the main areas covered under Cyber Insurance?
 
Cyber Insurance typically helps you with expenses spent on five main areas: 

1. Third-party liability
2. Emergency response and business continuity assistance
3. Recovery of your data and IT systems
4. Business interruption due to interference to your systems
5. Loss to you from crime or fraud. 
    

Does Cyber Insurance cover data loss? 

Yes, Cyber Insurance covers your lost information and data, as well as any loss caused to your customers or suppliers if a virus is transferred. It also covers:

• notifying potentially affected customers of a data breach
• employing computer forensic experts to identify and restore data
• repairing damaged computer systems, both hardware and software, to enable the data and systems to operate.

What are the benefits of Cyber Insurance? 

Cyber insurance is a specialist insurance policy that provides cover against cyber incidents or attacks that aren’t covered by other insurance policies, such as professional indemnity, management liability, or business packs. This could potentially leave a gap in cover. A Cyber Insurance policy will pay for legal costs, crisis managers, and payment of credits and refunds to customers.

What is Professional Indemnity Insurance? 

If you or your business provide professional advice or services, then you’re likely to need Professional Indemnity (PI) Insurance.

This insurance provides and pays your legal defence costs in the event that a customer complains that they followed negligent advice and suffered a financial loss – even if there’s no real basis for the complaint. If there was negligence, PI Insurance will also pay any damages awarded by the court.

Without Professional Indemnity Insurance, you or your business could be faced with having to organise your own legal defence, and pay potentially large legal bills as well as damages awarded by the court. The average claim amount is over $100,000 for legal costs, expert reports, and damages, so it can be a large amount to have to find quickly.

Typical professionals that purchase PI Insurance include:

• real estate agents
• construction consultants
• healthcare or allied health
• IT consultants
• lawyers 
• doctors.

Why is Professional Indemnity Insurance important?

Professional Indemnity Insurance is mandatory for many professions and must be in place before starting a business. It’s recommended that you check with your association or insurance adviser to find out if PI cover is compulsory, and the sum insured required.

For other professionals, although this insurance cover may not be compulsory, it’s an easy way to protect yourself and your business from large financial losses. Even with the best training or risk management, people still make mistakes, contractors can provide incorrect specifications, and advice can be misunderstood.

It’s worth noting that the cover provided by Professional Indemnity is different from Public Liability Insurance which covers defence costs and any damages relating to personal injury caused to people or damage to their property. This is not the same as financial loss caused by an architect placing walls in the wrong location on plans or an IT professional recommending the wrong software.

What does Professional Indemnity Insurance cover?

The exact cover will depend on your occupation and scope of activities. Broadly speaking, Professional Indemnity Insurance covers any negligent act, error or omission relating to:

• misleading, inaccurate or negligent advice; breach of confidentiality or privacy
• breach of consumer, competition, and fair trading laws
• loss of documents
• infringement of intellectual property rights
• malpractice, misdiagnosis, failing to order the appropriate tests, failure to treat
• defamation, libel or slander, including costs of disciplinary proceeding costs, claim investigation and expert reports
• public relations costs
• legal defence costs
• payment of damages.

As you can see, Professional Indemnity is a complex insurance with a wide range of cover options. We’ll work with you to understand your business, provide options to manage your professional risks, and recommend insurance cover.

Frequently Asked Questions

Who needs professional indemnity insurance? 

Anyone who is specially trained, provides advice or service, and is a member of an association or profession can purchase this type of cover. Real estate agents, construction consultants, engineers, healthcare or allied health professionals, designers, lawyers, IT consultants and doctors all need Professional Indemnity Insurance. 

In some workplaces or industries, it is mandatory to have this cover. Even if not compulsory, this insurance is important to protect you and the business from having to pay significant legal costs, as well as damages, if found to be at fault.

How much does professional indemnity insurance cost?  

Professional Indemnity covers you or your business for legal costs and any damages if there is an actual or alleged act, error or omission that causes a financial loss to a client or customer.

Premiums are typically based on:

1. Your industry – for example, construction, IT, or medical, some are at higher risk than others.
2. The scope of your business activities – for example, whether you’re a fire engineer or an IT engineer, the turnover/ revenue and number of employees or contractors.
3. Prior claims experience – the more claims or lawsuits, the higher your premium (and excess) are likely to be.

●    What is the minimum professional indemnity insurance? 

The amount of Professional Indemnity cover you need depends on:

• your occupation and potential for financial loss to the customer if there was negligent advice
• any mandatory requirements of your association
• the level of cover you choose, based on your level of risk, as well as the cost of the insurance.

Because different professions present varying levels of complexity and risk, we recommend talking with your insurance adviser – they are professionals who can work to understand your business and provide you with options to choose from.