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What is commercial insurance?
Commercial insurance, also known as business insurance, is an insurance policy that protects a business owner and the employees from any problems that could affect the business, any unforeseen events/risks that could interrupt a business. Such as injury risks. We all know that businesses are different, therefore, commercial insurance policies are also different.
What are the mandatory commercial insurance insurances in Australia
Generally speaking, in Australia there are three types of auto insurance which are required by law. They are:
- Workers’ Compensation
This insurance covers medical expenses and lost wages as the employees recuperate from an illness or injury. This coverage in fact is required by law, so business owners who have workers comp even if they have only one employee. The primary purpose of this insurance policy is to protect your employees against any financial losses if they are ill or suffer injuries in your workplace.
Workers’ comp is under a no-fault system; therefore, an employee doesn’t have to prove that the illness or accident was someone else’s fault, the employee will just be compensated for any injuries or illnesses sustained on the job. Employers looking for worker’s compensation insurance have these options:
- Self-insure – using an experienced insurance broker to purchase workers comp from a reputable insurance company.
- Sourcing via the State Compensation Insurance Fund (also known as State Fund). The State Fund will provide you with a reasonable workers’ comp, thus helping you save money.
- Third-party personal injury insurance
Also known as compulsory third-party insurance (CTP), this coverage is required by law if you own a motor vehicle in Australia. While NSW, QLD, and the ACT allow you to choose your CTP insurance provider, other states and the Northern Territory will include it in your vehicle registration fees.
It’s important to note that this insurance will only cover legal fees you’re liable for if you accidentally injure someone while driving. It doesn’t cover any damages caused—either to you or the other person—during the accident.
You may want to consider a separate insurance policy to cover potential medical and rehabilitation costs in case of an accident.
- Public liability insurance
If your business involves directly selling products to users or consumers, you are required by Australian laws to carry public liability insurance. Basically, public liability insurance will cover any damages and legal costs you encounter in the event of negligence.
- Commercial auto insurance
If you use vehicles in your business, you will need commercial insurance. Besides the fact that it is mandatory, you will find it very beneficial in case of accidents in which you or your employees are at fault.
In Australia, the average cost of commercial auto insurance is approximately $142 per month for small businesses, or $1,704 annually.
How much is commercial insurance in Australia
Believe it or not, this question is the most frequently asked question in the world of insurance and it is a difficult one to answer. Because there are so many different components that is used to calculate risk levels that can influence the cost, such as:
- The nature of the business
- The location of the business
- The business’ turnover and size
- The value of the insured property
- The type and number of coverages
However, we can inform you that small business insurance can range between $600 to $1,200 in total monthly. This is just a ballpark though; you could possibly end up paying more depending on the size of your business, number of employees, and the type of insurance coverage your business needs. You will likely need the following insurance coverages and in order to give you some ideas pricewise, we mentioned their average cost as well.
- Business owner’s policy: $99–$261 per month
- General liability insurance: $65–$88 per month
- Commercial auto insurance: $135–$188 per month
- Professional liability insurance: $56–$117 per month
- Workers’ compensation insurance: $70–$111 per employee/month
Note: Please keep in mind that not only the prices are dependent on you and your business but also it is dependent on your insurance company. Each commercial insurance provider has different ways of pricing and calculating risk levels and premiums.
What is Business Owner’s Policy (BOP) insurance?
A business owner’s policy, in short BOP, is a kind of insurance which is consistence of a combination of property and liability insurance by packaging these two coverages into a single insurance policy. BOP insurance coverage covers the costs of the claims of bodily injury or property damage. Almost all small and medium-sized business owners purchase this insurance. Businesses such as restaurants, wholesalers or retail shops. To be more specific, BOP covers:
- Liability
- Property
- Debris Removal
- Customer injury
- Movable property
- Advertising injury
- Commercial buildings
- Product-related claims
- Loss of income and pollution cleanup as part of a covered loss
- Policy endorsements that can extend coverage to cover exclusions
Other commercial insurance coverages
You can purchase additional coverage to make your policy cover ever aspect of your business and leave you with a peace in mind that you won’t have to deal with financial complications. Some extra coverages are:
Professional Liability Insurance:
Professional liability insurance can protect you against:
- Negligence
- Fair dealing
- Inaccurate advice
- Misrepresentation
- Violation of good faith
Sometimes, the E & O can cover privacy violations that may threaten your business. Generally, this policy can be a very good and useful insurance policy to invest in.
Medical Payments:
If the driver of your cargo van is injured in an accident, their medical bills and expenses can be paid with medical payments’ coverage. This coverage protects all passengers in the vehicle as well, and it pays out benefits regardless of who was at fault for the accident. Medical payments’ coverage is not available everywhere, so contact one of our licensed representatives to see if it is available for your company’s policy.
Physical Damage Insurance:
Physical damages insurance protects your cargo van itself. This coverage can pay for repairs or replacements that are needed due to a number of unexpected hazards, accidents and events. Physical damages insurance is important for companies that least their cargo vans because it provides the highest level of protection you can get. For this reason, it is also quite important for small businesses that have an outstanding auto loan or lien on their van.
Comprehensive Physical Damage Protection:
Comprehensive damage protection helps protect you from losses that are caused by unexpected events. It does not apply to roll-over accidents or collision incidents. Instead, it pays for losses caused by theft, damages caused by vandalism, and damages caused by natural disasters, among other things. If an electrical pole falls onto your cargo van in a lightning storm, for example, comprehensive damage protection can pay for the cost of repairs.
Collision Damage Protection:
This insurance option pays for damages that are caused when your van collides with another object, or when it is damaged due to overturning.
Specified Peril (CAC):
Specified peril insurance coverage protects you from events that are specified in your policy. This coverage is limited in scope and does not cover collision or roll-over accidents. This insurance is also known as Fire and Theft with Combined Additional Coverage, or CAC.
Uninsured/ Underinsured Motorist:
If another driver causes an accident, their auto insurance is supposed to pay for the damages to your driver, passengers, and the cargo van. If that vehicle is not covered with basic insurance, however, your company is left to pay your own repair costs. Drivers that do carry insurance do not always carry enough, however, and that can leave you paying some of the bills as well. An uninsured or underinsured motorist policy helps protect your company from these risks. When the other driver is at fault for the accident but does not have the means to pay for damages, your policy will do so instead. Uninsured or underinsured motorist insurance provides similar protection as your liability policy does.
