The problem is - it will cost you if you don’t have it or don’t have enough of the right.
An unfortunate problem when you get it wrong and the biggest issue is, if you D.I.Y. (do it yourself) with a direct insurer………………. how do you know if you get it right? Is the insurer ACTUALLY going to tell you what you need versus what you can buy versus what everyone else gets AND is that actually suitable to you.

Well, who the hell knows then? An Insurance Broker.

Why I hear you ask. Well, that’s all we do. Like a Doctor practises medicine, a Lawyer practises law, a Stock Broker trades in stocks, an Insurance Broker negotiates insurance policies with a multitude of insurer and underwriting agents across a huge range of different products to balance risk for clients.

The balance is where I am getting at with my headline, “Insurance doesn’t have to cost you the earth”. Ultimately, you need to understand one important fact. You can go broke buying every insurance policy known to man but do you really need all those policies? Proper balance for an insurance portfolio is essential to small business. That way you buy what you need, whilst unloading the risk to the insurer, hold onto some risk which is a calculated decision on what you can afford to pay for yourself if something goes wrong.

Most commercial leases will require you to take the following:
- Public Liability
- Glass Replacement

Some leases are now asking for evidence of:
- Workers Compensation

The reason for workers compensation now being added is to ensure that any injuries that occur on the property of the landlord are appropriately covered by Public Liability insurance if they are the fault of the business operating from that location or covered by a workers compensation as the public liability policy excludes cover for employees.

Balance is all about asking yourself what’s next?
Q1. If your business burnt down would this affect your available cash flow significantly enough to never restart? (Fire & Perils cover)
Q2. If your business lost its roof in a storm would you require some trading profits to continue to be paid? (Loss of Profits cover)
Q3. If you had a burglary would you be able to replace your stock so you can continue to trade? (Burglary/Theft cover)
Q4. If someone slipped over in your business and became tragically significantly injured do you want your house on the line? (Liability cover)
Q5. If your car got broken into while on the way to the bank and you lost the days trade of $5,000 will this break the bank? (Money cover)

So this is balance, what can you afford to hold as risk yourself and what do you need someone else with bigger pockets to pay for. I would suggest out of these simplistic questions stated above question number Q3 & Q5 probably wouldn’t break the business. I’m not suggesting in EVERY circumstance you don’t need to but Burglary insurance or money insurance but if you are weighing up risk versus reward I’d rather have the Fire & Loss of Profits along with the Liability Insurance and worry about the Theft and Money cover later once the business is established.

So, in establishing a starting point for a new business I would recommend as a minimum:
1 – Fire & Perils (including Accidental Damage)
2 – Loss of Profits (Business Interruption)
3 – Public & Product Liability (commonly called Broadform Liability and normally required by lease)
4 – Glass Replacement (normally required by lease)
5 – Workers Compensation (obviously only needed if you employ staff)

You obviously need to consider risk versus reward.
- If you have highly desirable goods like alcohol or cigarettes or electronics and the like then Burglary/Theft cover will be higher on your risk scale.
- If you are carrying large amounts of money to and from the bank and holding money during business hours at your business then you should consider Money cover a higher priority.
- If your business is highly dependent on electrical, electronic, mechanical or pressure vessels then you should consider a proper Equipment Breakdown cover to pay for the repair, replacement and loss of profits from downtime

Lately, I have seen a move to higher excesses from clients. This is an obvious move to save premium and the insurers are keen to not have to pay for small claims as they take time and eat away at their costs so make sure you consider increasing the excess from the standard $250 up to say, $1,000. Obviously as long as you can afford it of course!