What is Business Insurance For?

Are you wondering what business insurance is for? Find out more about the types of cover available here with Savvy. 

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, updated on September 4th, 2023       

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There are many different forms of business insurance available, so you may be wondering what the differences are between them and what they’re all for. You can take a deep dive into business insurance and its purposes right here with Savvy. You'll be able to look at all the forms of business insurance available in Australia and find out what they’re for right here. Get your business insurance queries answered with Savvy today!

What is business insurance for?

The purpose of business insurance is to help businesses manage risk by providing financial protection against a wide range of possible events or circumstances. Without insurance, businesses are vulnerable to losses which could cripple their operations and potentially lead to bankruptcy.  

Business insurance is a vital aspect of running any business. It’s a safety net which helps protect a business and its assets from unforeseen events. Business insurance covers a range of liabilities and risks that a business may face, such as theft, natural disasters or a variety of accidents. It’s designed to cover the costs of things like property damage, legal fees and other costs associated with incidents which can negatively impact a business. 

Insurance provides a range of benefits to businesses, including: 

  • peace of mind 
  • financial security 
  • protection against liability claims 

By purchasing insurance, businesses can transfer a greater portion of the financial risk associated with unexpected events which are covered by their policy to an insurance company. With insurance, businesses can protect themselves against financial losses and continue to operate with confidence, knowing that they’re covered against a range of events included in their policy. 

What types of business insurance are available?

These are some of the different types of business insurance available in Australia: 

Public liability insurance

Public liability insurance can protect a business and its staff against legal action in the event a third party is injured or their property is damaged while on the business premises or as a result of your activity. This includes another person's property that was in the business's care or possession at the time it was damaged. It’s another form of insurance which may be compulsory in certain circumstances, such as if you wish to hold a public event like a concert, performance or market.  

Product liability insurance

Product liability insurance can protect a business against claims that its goods are faulty, dangerous or caused harm to a third party. This can include an allegation of food poisoning at a restaurant to a building collapse due to the steel or concrete supplied for the foundations. It’s essential to note that a business can still be found liable for supplying a faulty product even if it didn’t manufacture the product itself. The business can be found liable if it packaged, advertised or retailed the product on behalf of the manufacturer.

Professional indemnity insurance

Professional indemnity insurance is a must-have for those whose line of work includes giving advice or performing a service. It can protect professionals from being held liable for damages and cover the expense of defending themselves in court against claims of negligence, omission or breach of duty while doing their job. This can include anything from unsuccessful surgery to giving financial or legal advice that turns out to be incorrect. 

Small business insurance

Small business insurance, also known as general business insurance, is a package which combines several types of insurance coverage into one policy. The specific coverage included can vary depending on the policy, but common types of coverage include property damage, legal liability and business interruption. It’s a type of insurance offered as a package to small businesses which covers the cost common types of insurance required.  

Commercial property insurance

Commercial property insurance is a type of insurance which can safeguard the owner or landlord's building, contents and rental income against various risks such as theft, fire, and storm damage. Other names for commercial property insurance include property owners’ insurance, commercial landlord insurance and commercial building insurance. 

Business contents insurance

Business contents insurance covers a business's assets from events such as storms, fires, impact damage, accidents, theft, and malicious damage. If you’re renting your business premises, you may not need building insurance. However, you may still need contents insurance, which can cover all the business equipment and stock in the shop, factory or office. This can include items which may not be in the office when they suffer damage, such as laptops and other mobile equipment. 

Business interruption insurance

Business interruption insurance can cover workers' wages, utility bills and the cost of relocation and rent if the business is unable to earn revenue due to an insured event such as a storm, fire, flood or impact. It can offer protection to the business and help it recover from a catastrophic event which would normally prevent it from operating. 

Cyber liability protection

Cyber liability protection can cover a business' online systems and data from cyber attacks, which could involve a hacking attempt, the business website being defaced or stolen, client data compromised or a ransomware or data hijack attack. Cyber liability insurance can cover the cost of repairing the damage, retrieving the stolen data and defending the company's reputation through legal action or investigation if it suffers such an incident. 

Management liability insurance

Management liability insurance is designed to protect businesses and their executives from legal actions taken against them by shareholders, employees or other third parties due to alleged wrongful acts in their roles as directors, officers or other executives. This type of insurance can cover legal fees, settlements, and judgments resulting from claims related to mismanagement.

Workers' compensation insurance

Workers' compensation insurance is a compulsory form of cover for employers. It can cover the cost of workers' wages if they’re unable to work due to an injury or illness sustained while working. It can also provide compensation if a worker suffers a permanent injury or death due to a work-related incident. This insurance can cover the cost of rehabilitation and any modifications needed to the person's home or office to assist them in coping with a permanent disability.

What types of business insurance does my business need?

The specific types of insurance your business needs will depend on several factors, including: 

  • the industry or profession you operate in 
  • the size of your business 
  • how many employees you have 
  • the risks your business faces 
  • the legal requirements in your industry or profession to be covered by a certain type of insurance 

Additionally, you can follow this process to help you determine what type of business insurance may be the most suitable for your needs: 

  • Assess your risks: think about the potential risks your business faces, such as accidents, theft, natural disasters or legal action. This will help you determine which types of insurance are necessary to protect your business from those risks. 
  • Evaluate legal requirements: depending on your industry and location, there may be legal requirements for certain types of insurance, such as workers' compensation or public liability insurance. Be sure to research any legal requirements for your specific business. 
  • Consider your industry risks: different industries have different risks and insurance needs. For example, a restaurant may need cover for food spoilage, while a construction company is likely to have to take out public liability insurance. Consider the unique risks of your industry when deciding on your cover. 
  • Review your contractual obligations: if you have contracts with clients, vendors or partners, review them to see if there are any insurance requirements. Some contracts may require you to have specific types of insurance coverage. 
  • Determine your budget: Insurance premiums can vary greatly depending on the type and amount of coverage required. Consider your budget when deciding on insurance and balance the cost of insurance with the potential risks to your business. 

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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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