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Business Expenses Insurance

Compare different business expenses insurance quotes here with Savvy to find the best way to get protected today. 

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, updated on July 17th, 2023       

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Having business expenses insurance can mean the difference between the success or failure of a small business. That’s because in a small business or partnership, all company members are vital and often the business can’t operate without key people. As such, it’s important for small business owners to consider what would happen to their company if they were suddenly unable to work. 

You can compare business expenses insurance offers here with Savvy to find a policy that can offer you the protection your small business needs if you’re unable to work. Get a range of no-obligation quotes from some of Australia’s leading insurers so you can consider policies side-by-side to see what protection is offered. Start safeguarding the future of your company today. 

What is business expenses insurance?

Business expenses insurance is a type of business insurance which acts as a safety net for your business if you (the business owner) become unable to work due to illness or injury. If this is the case, your insurance can cover a multitude of your standard business operating costs to keep your company afloat and solvent whilst you recover.  

This type of insurance often comes with monthly limits (for example, $50,000 a month) and kicks in if you become totally disabled and are unable to work. It often incorporates some form of death benefit too, so if you die during your insured period, your family will receive a lump sum.  

The cost of this insurance is linked to inflation and will change over the years. The Australian Taxation Office (ATO) regards payments received under such insurance as income, so your business will have to pay tax on the benefits received. 

For this reason, it’s very important to compare a variety of policies if you’re considering this type of insurance. You can do just that right here through Savvy just by answering a few simple questions. 

What does business expenses insurance cover?

This type of insurance may include cover for a whole variety of different bills and overheads that your business usually pays whilst you’re working and earning money. These expenses may include: 

  1. Rent or mortgage payments on your business premises 
  2. Staff salaries and wages 
  3. Utility bills including gas, electricity and water 
  4. Levies, council rates and contributions to Emergency Services 
  5. The cost of regular cleaning of your business premises 
  6. Phone, fax, internet and mobile phone bills and payments 
  7. The cost of routine security patrols or monitoring 
  8. Advertising costs including TV, radio and print ads 
  9. Scheduled cost of flyers, billboards or other publicity or promotion costs 
  10. Membership fees to professional organisations 
  11. Subscriptions to professional bodies, publications and societies 
  12. Leasing costs for vehicles and machinery 
  13. Equipment maintenance costs such as photocopier servicing 
  14. Accounting fees to prepare BAS statements and tax returns 
  15. The cost of appointing a locum to replace you if required 

As you can see, the overheads covered by this type of insurance are extensive and can mount up if there’s no revenue being generated by the business (which is why it’s sometimes referred to as business overheads insurance). The list of what’s covered as a business expense is far longer than what isn’t, which includes: 

  1. Salaries or wages of temporary staff or employees 
  2. Cost of new furniture or fittings 
  3. Inventory costs 
  4. Income tax 

What types of business need business expenses insurance?

This type of insurance is worth considering if you’re: 

  • A sole trader (so your work is the only source of business revenue) 
  • In a partnership with one other (particularly if that one other is a family member who also relies on your income)  
  • In a small business partnership with less than five partners 
  • A professional or consultant who is the sole source of income for a business or trust structure 

Business expenses insurance is really a form of life insurance, but rather than cover the cost of your income if you are too sick to work (which income protection insurance does), it covers the cost of running your business if you are relied upon to keep it afloat. It’s also related to accident and sickness insurance

For example, if you’re a physiotherapist and your clients rely on your services to generate an income for the business, this insurance would cover your business expenses and the cost of employing a replacement physiotherapist while you were unable to work.  

To decide if you need this type of business insurance, think about how your business would function if you, or a business partner, were suddenly unable to work, and how long you’d be able to continue paying your bills and expenses to keep it afloat. 

Top tips for comparing business expense insurance

Compare waiting periods

Almost all policies have a waiting period before you can start to claim your expenses on the policy. This can range from one week to a month. This is important to consider, as while the longer the wait is, the cheaper the insurance will be, this also means you won’t be able to claim for longer. 

Look at the length of cover

Some policies have a time stipulation for the period over which expenses can be claimed. This can range from six months to a year. Check the policies you’re comparing have the same time limits to make sure you’re comparing apples with apples and ensuring you’re covered for as long as you need. 

Consider whether there are any maximum payout limits

Some business expenses policies have a maximum payout limit which applies either monthly or cumulatively for the period your business is covered. This can range from $50,000 per month to a cumulative total of $500,000 (up to over $1 million or more). Again, check that you’re comparing policies which have a similar limit. 

Look at bundling

It may be worth asking your existing insurer whether they can bundle business expenses insurance with other types of insurance you may already have. It may be cheaper to include some elements of this insurance in a general business package rather than take it out on its own. 

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More of your questions about business expenses insurance

Can I choose the waiting period before my insurance kicks in?

Yes – you’ll often be given a choice as to the waiting period before you’re able to make a claim. Carefully consider how long your company could operate if you were suddenly incapacitated and unable to work, and base your waiting period around this figure. For example, if you’re running a business on the Gold Coast focused on tourism, you may decide that you can wait a month before claiming under this insurance if your injury happens in the off-season when tourist numbers are low anyway. 

How is business expenses insurance different from income protection insurance?

While both forms of insurance pay out if you’re sick or unable to work, income protection replaces your average income, whereas business expenses covers the costs associated with running your business. If you’re unable to work, income protection may look after you and your family, but it won’t help your staff get paid. Business expenses insurance will take care of your staff, your landlord and others who rely on you to pay them regularly. 

Do all business expenses insurance policies have a maximum one-year limit?

Yes – most policies are only issued for one year, after which time you will have the option to renew your insurance. However, such policies are often inflation-linked, so you can expect the cost to increase in periods of high inflation.   

Is business expenses insurance tax-deductible?

Yes – although you’ll have to pay tax on the benefits received, you’ll also be able to claim the cost of this insurance as a tax deduction, as it’s classed as a cost of doing business. 

Is business expenses insurance the same as key person insurance?

These two types of insurance are related but aren’t the same product. Business expenses insurance is usually taken out by the owner to protect their business if they’re unable to work. On the other hand, key person insurance is taken out by the business itself to protect the company in the case of the sickness, total or permanent disability or death of key company personnel. It’s frequently paid out as a lump sum and is designed to assist the company with reduced income while a replacement is found or the key person recovers and returns to work. 

How much does business expenses insurance cost?

The cost of the insurance will depend on the age and health status of the applicant (or multiple applicants if business partners are jointly applying). If more than one person is to be covered by the policy, the details of each person covered will need to be provided. The cost will be based on factors such as: 

  • Your age 
  • Your general medical history 
  • Current health status 
  • The type of work you perform 
  • The length of the benefit period requested 
  • The structure of your business and how many other income earners there are to help keep things running 
  • Where your business is located 

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Savvy does not compare all business insurance policies or providers currently operating in the market. Any advice presented above or on other pages is general in nature and doesn’t consider your personal or business objectives, needs or finances. It’s always important to consider whether advice is suitable for you before purchasing an insurance policy.

For any further information on the variety of insurers compared by BizCover or how their business works, you can read their Financial Services Guide.

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