Key Insurance Products for SMEs — A Guide

Working out what insurance cover you need for your small business can be challenging. It can be difficult to anticipate what risks might apply to your operation before they happen and all too easy to overlook something you're unaware of. This checklist of questions is designed to help small business owners identify the policies they may need — with some tips about how to approach getting them.

Some insurers offer bundled packages that include the types of cover commonly required by SMEs. These may have the flexibility to add or subtract policies to customise the package to your business needs.

Use the following checklist to help determine the insurance cover and protections your small business needs.

What are my key business activities ‒ and what risks are involved?

Whether simply conducting business online (exposing you to cyber threats), working with dangerous materials or in a building open to the public, your business will carry risk.

For insurance purposes it's vital that you and your insurer understand what these are, so full and complete disclosure is important. Otherwise if something goes wrong and it isn't covered by your business insurance, you may be left with the responsibility for paying for damages yourself.

What legal and regulatory obligations apply to my business?

Some industries and professions require you to hold specific insurance cover before you can operate your business or enter into legal contracts, and this may vary according to state or territory.

Be sure to check regulatory requirements for your business and location(s).

For example, if you employ workers on any basis — including voluntary — in your business you must take out workers compensation insurance in case they are harmed in any way while performing work duties.

In some states and territories this must be purchased from a mandated insurance provider, in others you may be free to choose the insurer.

Does my business have a public liability exposure?

For some business activities this type of insurance which protects you against public liability damages claims is compulsory. But while event organisers and construction businesses, for example, have clear cut risk exposures in this area, for other businesses the risks might not be so obvious.

Basically, if members of the public have access to your premises or work being conducted then they may injure themselves or their property could be damaged. public liability insurance is designed to cover the legal costs involved if the injured person or owner of the damaged property brings a case against your business, including incident investigation, legal representation and settlements or penalties.

Having this type of cover can save you hundreds of thousands of dollars!

Does my business have a professional indemnity exposure?

Any business that provides a professional service to clients — and this includes a huge range of occupations from consultants, architects, engineers and accountants to personal trainers and tattooists — can run the risk of the customer being dissatisfied for any number of reasons. You may have overlooked something that turned out to be important, one of your staff may have made a mistake or you could have simply misunderstood the requirement.

In any case the client may feel strongly enough to bring a legal action for damages and if that happens it pays to consider holding professional indemnity insurance to cover your costs.

Do I use vehicles for business purposes?

If you use your own car for business activities such as client meetings, deliveries or site inspections, or have a fleet of any size you should consider commercial vehicle insurance, which can provide broader cover than standard personal vehicle insurance. At a minimum, remember that it is compulsory to hold third-party liability insurance for each of your company vehicles.

What are all of my business assets?

Even if you don't own the business premises you operate from, everything that you do use in your business activities can be considered an asset, from plant and equipment, electronics and office furnishings to outbuildings and tools of the trade, and can be protected by property insurance.

Doing a walk-through can help with making an inventory for insurance purposes, and it's a good idea to keep purchase and maintenance work receipts to assist with assigning replacement values.

In all cases it is recommended that you need to insure for the replacement value, not the purchase price.

Do I need to protect the business's revenue if I have to suspend business operations?

The past few years have demonstrated that business owners have no control over enforced closures and how long it might take to resume trading. While some may have enough cash in reserve to continue covering expenses such as rent, electricity and wages for a limited period of time, small businesses typically can't lose turnover for long.

business interruption insurance covers your business costs and helps compensate for lost revenue for the specified term of liability. Not underestimating this period is critical to riding out the disruption to reopen your doors.

If your business uses the internet, you're at risk of a cyber attack

In recent years we have heard about cyber attacks on large corporations and this publicity can lead to small business owners thinking they can fly under the radar. What the media doesn't show is that small businesses are just as likely to be targeted and don't have the turnover to recover afterwards.

It doesn't matter if you only use online cloud services for your business, if your business is responsible for any form of client data you will be liable if cyber attackers steal it. Cyber insurance can help you navigate this, ransomware attacks, loss of funds through online scams and a variety of cyber issues.

Do I need an insurance broker to find business cover for me?

If your business risks are straightforward and you have an understanding of the types of cover you need you may be able to buy direct insurance cover, but there are many advantages to using an insurance broker. This is especially true if you have multiple business risks, are faced with insurance complexity, or need a better understanding but don't have time required to work through the insurance details alone.

Resources: an insurance broker has access to a greater choice of insurers than you can find by yourself through direct insurance options.

Terms: as a professional an insurance broker may be able to negotiate for more advantageous terms or scope of cover by leveraging existing relationships with insurers.

Comprehensive coverage: a broker can help identify risks in your operations that you don't realise or have overlooked and can proactively advise on risks and insurance protections business wide — from cyber to management decisions, to machinery and equipment breakdowns.

Business understanding and Industry knowledge: a broker works to understand your business and industry sector can bring greater depth of knowledge of the potential risks involved — and the most appropriate insurance for your business.

How Gallagher can help

Working with a broker to understand your business risks can help you to identify the right insurances to mitigate your risks and give you confidence in running your business. Our Gallagher small business experts can develop a program of insurance cover for your business that protects you when you need it, with support at claims time, and provide you with confidence that you have the protections in place for your assets and risks.

We have Gallagher brokers nationally across small to large businesses, in all industries, to provide professional advice and expertise.

Updated 23 April 2024

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