Know Risk is a community education program designed by the Australian and New Zealand Institute of Insurance and Finance (ANZIIF) to improve our understanding of insurance and how it relates to managing the many risks we all face in life.
Business pack insurance for my small business: do I need it?
Unpacking business pack insurance.
As a small business owner, it’s possible you may have heard something about business pack insurance. Even if you don’t know exactly what it entails, it’s likely you are familiar with the term.
Sometimes, keeping up with all the different types of insurance that are relevant to a small business can be overwhelming. At times, it may seem like it’s hard to keep up with all the coverage options available to you, and it’s hard to know which ones are necessary and which ones aren’t.
The good thing about business pack insurance is that it can help simplify your insurance needs by streamlining them.
What is business pack insurance?
In simple terms, business pack insurance is cover that combines a range of different insurance types under one policy. So, for example, instead of having an individual policy for business interruption, an individual policy for property and an individual policy for liability, you could get business pack insurance, which will cover all of these things under the one policy.
Instead of having to keep track of a whole bunch of different insurance policies, you only need to keep track of the one insurance policy.
Another positive of business pack insurance is that not only will it lower the number of policies you have to keep track of, it may also lower your insurance premium as underwriting several risks together tends to work out cheaper than purchasing individual policies.
What types of things are usually covered under business pack insurance?
The types of cover offered under business pack insurance policies will differ between insurers. While insurers don’t typically offer all of the cover types in the below list under the one business pack policy, these are the types of things that a business pack policy may cover:
- Property (this usually includes buildings, contents and stock that are accidentally damaged by a defined event)
- Public and product liability
- Machinery breakdown
- General property (usually tools and professional equipment that are not stationary)
- Computers and electronic equipment
- Equipment breakdown
- Business interruption
- Employee dishonesty
- Tax investigation
- Personal accident
- Marine and cargo
Insurers usually offer what is referred to as a “standard” business pack policy, which will include a handful of the most common cover types in the above list. Most of the options above that aren’t included in the “standard” policy can usually be added to the policy if you so wish — in exchange for a higher premium, of course.
Are there types I can tailor to my small business?
The answer to that is yes. Some insurers have business pack insurance that they have designed specifically for small businesses. These insurance policies are typically based on the lower annual turnover of small businesses (as compared to the annual turnover of large businesses) and will vary depending on the industry in which your small business operates (i.e. most insurers don’t offer a one-size-fits-all small business insurance pack policy; they usually have a range of options available to small businesses that cater to different industries).
If none of the options insurers themselves have curated appeal to you, the majority of insurers will let you customise business pack insurance to your business so that the insurance cover will match the specific needs of your small business. With customisation, the insurance company will usually give you a bunch of individual insurance covers (similar to those listed above) and you can pick and choose which ones are most relevant/important to you.
Do I need it?
As always, the only person who knows the answer to that question is you. You are the expert on your business and the particular risks posed to it.
However, have a think about the types of insurance policies you currently have — are there quite a few? Would they be easier for you to keep track of if they were all combined under one policy? Would it be more cost-effective for you?
Have a think about the types of cover in the bullet list above — are you covered for all of the risks posed to your business? Or are there some liabilities of which you weren’t previously aware? Would a business pack policy help you plug those liability holes?
Having a think about the answers to these questions should help get you on your way to deciding if business pack insurance is a good policy option for you. If you’re still unsure, engage the help of an independent adviser (i.e. one who isn’t affiliated with a particular insurance company) to help you make a decision that is right for you and your business needs.