Running a business is an exciting endeavour but it also means being exposed to certain risks. Risks specific to your business depend on factors like your industry type, location and technology usage. For instance, some of the most common business insurance risks range from data breaches and property damage to manufacturing issues. All of which are unpredictable and expensive. And although some pitfalls and challenges are unavoidable, proper planning and the right insurance coverage can help mitigate your business risks. Let’s take a closer look at the five most common business insurance risks.
Data breaches are one of the most severe business insurance risks companies face today. One data breach could expose sensitive customer information, cost thousands in damages and severely harm your reputation. Technical security measures aside, the best way to protect against the consequences of a data breach is with cyber liability insurance.
Cyber liability insurance covers legal fees associated with a data breach and any financial losses incurred by customers or employees due to stolen data or identity theft.
Property damage is another common business risk that many businesses face. This risk includes fires, floods, windstorms and vandalism that can cause severe damage to your physical property and equipment. To protect your property from loss or damage, you should have a comprehensive property insurance policy covering these events. If you do suffer an unexpected loss due to natural disasters or other causes, having an insurance policy that covers the costs means you don’t have to pay out of pocket for repairs or replacements.
Businesses that manufacture products also face unique risks related to product defects and recalls. If there are problems with the quality of your products or they fail to meet safety standards, it could lead to costly lawsuits or costly recalls if you’re unable to fix the problem on your own. An extension to a standard Product liability insurance to include Product Recall cover can help cover legal costs associated with product defects and any expenses related to recalling defective products from stores or distributorships if necessary.
Human capital cost
Businesses with employees must carry workers’ compensation insurance but other protective policies are also worth considering. For example, management liability or employment practices liability insurance can help protect your business from claims of wrongful termination, discrimination or sexual harassment. In addition, key person insurance can help your business recover in the event of an unexpected death or disability of a vital asset like a company executive.
Professional services mistakes
Sole operators, consultants and web developers working from home are always at risk of a customer pursuing legal action if the resulting “product” is unsatisfactory. For instance, customers who complain about your services could take you or your business to court. Professional liability insurance helps protect you from these types of risks. Policies of this nature cover the legal costs associated with any mistakes made while providing your service and other associated damages.
Getting advice on business insurance
At Carbon, our insurance brokers can help you review each type of insurance and consider if it’s something your business needs. Importantly, we can suggest insurance packages tailored to your business type and industry. With decades of experience in providing accounting, financial and business advice, our insurance team will help you get the right level of protection for the right price. After all, insurance packages are often cheaper than separate policies.
Alternatively, if you seek advice from independent professionals, ensure you’re talking to a licensed insurance broker or advisor. Ask if they have a current Australian Financial Services (AFS) licence. If not, don’t deal with them. If yes, check the broker’s license and details on ASIC Connect’s Professional Registers.
Additional strategic advice
In addition to saving money by identifying the right insurance package for your business, our team can also provide strategic advice and guidance on minimising any financial risks your business may face. For instance, are you taking proactive measures to create an effective data security policy, investing in business continuity planning or implementing better cash flow management protocols? We can help.
Stay protected against common risks with experienced insurance brokers
Every business faces financial, physical and industry-related risks that can significantly impact operations. However, by understanding the risks and taking proactive steps, such as purchasing comprehensive business insurance policies, you are in a better position to recover should problems arise.
Why not get started by booking a consultation? Our licenced insurance brokers can review your business insurance needs and answer any additional questions you may have. At Carbon, we offer a comprehensive team of accounting and tax professionals, bookkeeping and CFO services, insurance brokers, wealth management and more. Our insurance brokers also work hand in hand with our financial planners, accountants, bookkeepers and finance brokers to ensure your business is protected from all ends. Just give us a call on 1300 454 174.