Category Archives: Business Insurance
Posted on 18 May, 2018
In last month’s Part 1. Of our Home & contents insurance trips and traps series, we took aim at a few different types of cover, including accidental damage and holiday-home cover, and where to look for some standard industry trappings, laying out what some insurers may include in the fine print of a contract, and as well some areas where you may get tripped-up if you’re not diligently reading your insurance agreements.
This month, we take a look at the finer details of what insurance companies define as ‘Flood Cover’, terms and definitions to look out for and the variety of cover options for you to choose from. As well, we investigate the nature of home-business and home-sharing cover, and what It can mean for your personal liability and contents safety.
Traditionally, if Flood cover was not covered by a Home & Contents policy, it was the insurer’s legal obligation to clearly inform a policyholder of that fact – otherwise, cover was deemed to be effective.
As a majority of people are not exposed to a Flood risk it was unfair to charge everyone a levy to cover those who opted to build or buy a property in a flood-prone area, so Flood cover was not readily available from insurers.
However, with the regular traumatic flood damage to properties in far north Queensland the Federal government decided that Flood cover should be more accessible from insurers and urged insurers to provide the cover. However, without extensive mitigation of flood risk areas by local councils, it is impossible for insurers to provide cover at a reasonable cost in high exposure areas.
So instead of insurers providing automatic cover for Flood, we now have a mix of cover options for policyholders to be aware of as follows:
- The insurer provides automatic cover and spreads the cost of providing the cover over their whole portfolio of policies – cover cannot be deleted if the price is too high;
- The insurer provides cover with the option for the policyholder to opt out of the cover if the price is too high so it is clear they have made that decision in the event of a claim;
- The cover is optional and often very expensive in high-risk areas – policyholder has to make a decision at the commencement of the cover;
- The cover is not available at any cost which is highlighted in the policy.
So what does Flood mean in terms of an insurance policy jargon?
Generally, a flood is defined as the escape of water from any type of formal waterway such as a river, creek, reservoir, channel or dam as examples.
The Flood definition does not exclude water overflowing from a gutter, leaking from a pipe or tank or water run-off if it has not escaped from a waterway, as examples which are covered as a standard insured event.
So historically, it was an insurer’s responsibility to clearly inform a policyholder if Flood cover was not included. However, it is now almost a “buyer be aware” situation about Flood cover for a policyholder buying cover if they are not careful and be aware of the different policy covers offered.
One high profile insurer excludes any Business activity from a home. However, most insurers provide some limited coverage for such contents as office plant and equipment, stock and trade tools at the premises only.
The problem is that there is no cover for the business against its possible legal liability for injury or property damage to customers visiting the premises or others away from the premises. Also, there is no cover for the business’s legal liability in respect of any goods sold or manufactured. The reason for this is that it is difficult to underwrite the legal liability risk for the variety of business types that can be undertaken at home whereas contents cover is not so difficult to underwrite.
The result is that business owners need to have a separate Public / Products liability policy to cover their legal liability which many small home businesses would not understand.
The good news is that in the next few months a new Business Package policy will be available which includes all the required covers including legal liability and business interruption loss of income and extra expenses for many types of non-hazardous business.
If you have a spare room at home and are following a worldwide trend like Airbnb rentals to earn some extra money from short-term tenants, you need to be aware that all home policies have a legal liability exclusion for most business activities causing injury or property damage (as mentioned above).
Also, most policies will not cover tenant caused damage to your home or contents when letting out to others. Some insurers will insist you buy a Landlord policy which fixes some problems but creates others resulting in less cover than the normal home type of policy. Some others will insist you buy a Business package policy to get full coverage. And some insurers have a specific policy tailored for bed and breakfast businesses.
One good solution is to buy a separate Tenants’ risks policy which just covers the gaps mentioned above in a conventional home policy which occur as result of having rent-paying tenants in your home. This solution then does not prejudice the cover of your home policy like having a Landlord policy instead.
If you would like more information about any of the above articles, Donnellys would welcome your enquiry on (08) 8236 7789.
Note: This information is provided as general advice only to readers as a guide to Australian insurance policies. You should not rely solely on this information for your own situation and need to read the policy and PDS for any insurance that you are considering buying to ensure it suits your circumstances.
Posted on 04 December, 2017
In February 2018, a new mandatory data breach notifications scheme will come into effect in Australia, with a number of companies being required to notify customers, as well as the Australian Privacy Commissioner of any data breaches.
This new policy makes holding the appropriate cyber attack insurance more important than ever, especially considering new research has shown that small businesses are just as exposed as larger corporations to cyber attacks.
For instance, in 2016 alone, the Australian Cyber Security Centre (ACSC) reported that approximately 90 per cent of small Australian organisations experienced a cyber threat or data breach, with 58 per cent of these attacks proving successful. These results have increased significantly when compared to data from previous years.
The Cost of Cyber Security Breaches in Australia
Regardless of how secure your network is, small businesses do have the risk of falling victim to a ransomware attack or a data breach. This can impact your business in a variety of ways and can come with a number of associated costs, including:
- IT forensic costs
- Customer notification costs
- Increased costs of working
- Legal defence costs
- The costs associated with a loss of customers, due to lack of trust
Data breaches can also have a negative effect on your business’s image and reputation, which can influence your future earning potential.
Large-Scale Data Breaches in Australia
In the last year, Australia, and the world has been hit with a series of major ransomware attacks, which have affected both big and small businesses alike.
The latest cyber attack to hit Australian shores has seen 50,000 Australian personal records, including full names, passwords, IDs, contact details, credit card details, and even confidential salary information become vulnerable.
In what appears to be one of the country’s largest data breaches, second only to the leak of information on 550,000 blood donors last year, a whopping 48, 270 Australian employees from several government agencies, banks and utility organisations have had their personal information left accessible as a result of a misconfigured Amazon S3 bucket.
Thanks to this third party misconfiguration, the likes of AMP, UGL and even the Department of Finance have been affected. The identity of the responsible third party is unknown, but the breach was reported to the ACSC, allowing all of those involved to start working on a fix.
“Once the Australian Cyber Security Centre (ACSC) became aware of the situation, they immediately contacted the external contractor and worked with them to secure the information and remove the vulnerability,” a spokesperson for the ACSC’s parent agency said.
“Now that the information has been secured, the ACSC and affected government agencies have been working with the external contractor to put in place effective response and support arrangements.”
This is just one example of the vulnerabilities and risks that are faced by countless Australian businesses. It is hoped that the new mandatory data breach notification laws will help the relevant Australian authorities crack down on cyber threats to businesses, while also minimising the effect of such breaches.
However, holding an appropriate cyber attack insurance policy is an absolute must for any business, as the costs of a successful cyber attack can be crippling. To learn more about how you can protect your businesses finances through the appropriate insurance schemes, contact Donnellys today!
Posted on 06 November, 2017
A large number of Australians are attracted to the residential property investment market because of the substantial financial returns that are well within reach in this relatively safe environment.
This is largely because the property market is considered a wise investment when compared with traditional investment options that can’t match the leveraged growth potential of residences in prime locations over a prolonged period of time.
Residential property investors often use their properties in one of the following three ways:
- For their own use as a holiday house.
- As a full-time rental property for suitable tenants.
- As a part-time seasonal rental and for their own use on a part-time basis when it’s not rented out.
Extra Insurance Coverage for Property Investors
When a property is being used for any of the above-listed purposes, investors need to be aware that a standard home policy might not provide the coverage they need for proper protection.
Some common exclusions for investment properties in standard home insurance policies include:
- If the property is left unoccupied without approval from the insurer for longer than the standard period of time defined in the owner’s policy, the cover will automatically be restricted to a basic level.
- If the property is leased full time to tenants, then a standard home policy does not cover certain risks relating to the tenant’s occupancy. Some examples of this are: Default of Rent, Deliberate or Malicious Damage, Theft by the Tenant, and Tenants’ Pet Caused Damage. For proper protection, these specific risks will need to be insured under a Residential Landlords’ policy.
- If the property is leased on a part-time basis to tenants for short stays, particularly during peak tourist seasons, many landlord insurers will not cover the owner for tenant-related claim events. However, cover for these types of risk is available for the short term through specialist landlord insurers, such as Rent Default. This cover can also provide protection for additional risks like drug-related cleanup and garbage removal.
As you can see, securing the right investment property insurance involves a lot, which makes undergoing this task by yourself difficult. Donnellys have been guiding residential landlords through this process for more than 40 years. Contact us for assistance in obtaining the best value residential landlord property insurance today!
Posted on 20 June, 2016
Recent research has revealed a worrying trend in Australian small business practice. While the overwhelming majority of SMEs believe they have adequate insurance cover, the chances are that unless they took out their policy very recently, many of the assumptions they made at the time are no longer valid.
This has left several businesses seriously weakened after a loss that was not fully covered, and in some cases has been fatal to the business. This article discusses some of the reasons for the shortfall in cover, and how SMEs can make sure their insurance gives them the protection they need.
Liability limits are determined on the basis of current damages awards. Decisions by the courts to make higher awards or which find a duty of care where none had previously been believed to exist may make these limits inadequate, leaving a shortfall which the insured must cover. Case law is being made all the time. A regular review with your broker, who will be keeping an eye out for landmark judgements, is essential.
Cost of Repairing/Rebuilding
Building costs in Australia have risen steadily in recent years, and business policies should clearly be maintained to cover this. But what is less obvious when calculating restoration costs is that changing requirements and building codes may mean that “more” building and equipment may be required to restore a commercial building to operational health than was contemplated when the policy was issued. Consider these stats:
- Between 2010 and 2015 the cost of building a warehouse/distribution centre rose from $600 to $975 per m2 of internal space.
- Project Construction Costs
- Sydney Tower was completed in 1981 at a cost of $36m.
- Barangaroo Tower 1 came in last year at $1billion
- Fitout Costs
- 2005 – Café in Inner Eastern Sydney, $160,000
- 2015 – Café in Northern Beaches, $300,000
Hidden Rises in Building Costs
Much of the difference in cost between these two buildings is the consequence of the later building containing so much more technology-related infrastructure. Another major source of cost overrun is the advanced HVAC systems required to meet
contemporary energy-usage demands. But as we have discussed, changes to the building regulations can also add a nasty surprise to the costs of a rebuild.
If you would like a health check-up for your business insurance policy, give the team at Donnellys Insurance Brokers a call today.
Posted on 12 June, 2015
Digital technology has changed the way most companies do business but their insurance cover has not always kept pace. Cyber attacks and other cyber events are now some of the most common forms of losses faced by businesses. As this risk is moderately new and has grown rapidly many businesses are not adequately covered by their existing business insurance.
Most businesses have insurance cover for fire. A cyber attack or event is akin to a digital fire and can have a similar impact to the operations of your business.
Cyber attacks and data breaches are growing fast and increasing in severity.
It doesn’t matter what the size of your business is. If you handle customer or transaction data, you run the risk that a data breach could lead to significant costs due to business interruption or others making claims against your business.
Cyber cover can PROTECT YOU in 4 ways:
- Losses to your business
- Loss to others
- Cyber event response costs
- Contingent business interruption
Cyber insurance can COVER YOU for the following events:
- Point of Sale intrusions
- Web app attacks
- Insider and privilege misuse
- Physical theft and loss
- Payment card skimmers
- Denial of service
- Cyber espionage
- Miscellaneous errors – Human error
- Cyber extortion
When you are hit with a cyber attack you need immediate expert support to help you assess, manage and respond to the threats to your business, customers and other other parties. Cyber cover can give you this support and protection.
Where are the gaps in your traditional insurance policy?
Traditional insurance Potential shortfall General liability covers Unlikely that policies will provide cover for data breaches Property Covers Typically require physical loss or damage and may specifically exclude electronic data Directors and officers/management liability Would usually only respond to actions brought against D&O’s for wrongful act Professional indemnity/Errors & Omissions Cover is not usually afforded for information/data breaches (unless part of professional services Cyber Extensions Most cyber extensions are only as effective as the underlying policy cover.
To find out more about the market leading and competitively priced Cyber event cover for SME businesses call one of Donnellys Business insurance broking consultants on (08) 8236 7777
Posted on 08 October, 2013
Insurance needs are diverse as businesses themselves …
Just like legal contracts generally, an insurance policy should be tailor made for your particular needs otherwise you could be left unprotected. Insurance companies develop policies to suit the majority of business situations but these policies need to be made to custom fit your business.
The Insurance Brokers Role
Given the continually changing nature of insurance, with its technical and legal ramifications, it is impossible to make the right choice of policy without expert independent advice. Just as businesses would seek expert legal, accounting or tax advice from an appropriately qualified professional adviser, a Qualified Practising Insurance Broker (QPIB ) can provide you with expert insurance advice you need.
QPI Bs are uniquely qualified – by examination, experience and on-going training – to provide independent advice on all insurance matters. The role of a QPIB is not selling insurance but rather to provide unbiased professional advice and to arrange the right cover for you at a competitive price … a QPIB represents you not an insurance company.
What you can expect from your Insurance Broker
- Claims Advice and Assistance
When you place your insurance business in our hands you can be sure we will be personally involved with all aspects of your claims:
– from your initial report of the incident,
– advice on how best to proceed (what to do and what not to do),
– consultation and negotiation with appointed claims assessors,
– fast tracking of paperwork and assessment,
– monitoring to eliminate delays,
– ensuring a prompt and fair settlement.
Remember, as your independent insurance broker it’s our role to represent you – not the insurance company, with unbiased professional advice so that you get back to business as promptly as possible with your correct payment.
- Risk Exposure Analysis
We take the trouble to find out about your business and it’s activities so that we can best advise you on how to minimise interruptions to your operations. Your company’s insurance cover is an integral part of its financial well being.
Your business is unique so “off the shelf” policies may well fall short of your cover needs … our policies are tailor made just for you.
Our analysis of your business will highlight the following:
– are there any major uninsured risk exposures you don’t know about?
– are your policies up to date with market developments in coverage?
– are you getting the best value for money for your premiums?
– do you have too little or even too much cover?
– can your premium payment be better spent on major risk exposures rather than minor ones?
- Market Review
The saying: “you only get what you pay for” usually applies to insurance as well as most business transactions. But, intimate knowledge of the complex insurance market and using buying power leverage certainly can assist in achieving premium savings … without compromising the quality of coverage.
Donnellys undertake to provide you with the best value insurance cover available with reputable insurance companies that satisfy our financial and service quality standards on your behalf, on an on-going basis.
Posted on 22 December, 2018
‘tis the season to be jolly…so make sure your home is safe, secure and you are adequately covered over...Read on
Posted on 27 November, 2018
If criminals in balaclavas and clichéd Hollywood computer hackers are among your greatest concerns for the cyber safety of your...Read on
Posted on 15 November, 2018
From typical property damage and liability risks like slip-and-fall and equipment breakdown to less common ones like food-borne illnesses,...Read on
Posted on 15 November, 2018
Generally, when you own your own home, taking out insurance on your property is something that is done without...Read on
Posted on 27 June, 2018
This month, the Donnellys team delve deeper into our Car Insurance series, and detailing in greater detail exactly what...Read on
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