Hot Off The Press

Understanding your Business Insurance

brettr@afoofagroup.com (Brett Radcliffe) — Thu, 10 Sep 2020 00:09:51 GMT

The more you understand, the better the cover!

W hen it comes to business insurance the first thing you have to understand is that there are many different types of businesses, some are retail and require Retail Insurance, some are professional services and require office insurance, others are service based and require trade insurance.

With as many different types of businesses you can think of, there are also as many different types of business insurance policies you can choose. Generally speaking however they do all have the same core structure to them.

Business insurance policies are broken down into sections offering different types of cover. You can choose to insure a section or not depending on how you view risks to your business and what financial position you are in to mitigate them. In most business insurance policies though, there are 10 basic sections which you can insure under. These are as follows:

Property or Fire & Perils Insurance:

This is insures your buildings, contents & stock to cover them with Fire insurance, Storm insurance, Malicious Damage insurance, Accidental Damage insurance, Impact Damage insurance etc. As mentioned earlier, all insurance policies are different. Some insurers include stock under the contents section, some do not, some will cover you for flood, some will not, so you need to make sure you know what is covered before you take out a policy.

Business Interruption Insurance:

This insurance is often not well understood by many in the insurance industry let alone you as a business owner.

It provides cover to insure the loss of or shortfall in income that results after an insured loss (ie you can’t trade for 2 month after a fire). The basic cover gives you protection of your gross income (turnover less cost of goods sold in insurance talk) as well as fixed expenses for a chosen insured period). In order to have a comprehensive cover under this section it is well worth consulting an expert as there are many extensions you can add that save you heartache in the event of a claim.

Theft & Money Insurance:

Some insurance policies have these covers separate while others combine them. The cover in either case is pretty much the same.

Theft is where you insure your stock and contents for cover for theft. You can often choose extensions to include theft without forcible entry and shoplifting as well.

Money is a little more complicated but the basic idea is to cover your business cash. You nominate a sum insured and you can choose to cover this on the premises during business hours, on the premises during non business hours, in transit to and from the premises, in private residence and a few others. You can also choose to have a “blanket cover” that covers most of the above under one sum insured.

Glass Insurance:

This cover seems self explanatory in that is covers breakage of fixed glass but, has more to it then you may think.

Glass cover is generally split into two options, External cover for windows and doors and internal cover for display cabinets and fridges etc. and you can choose to insure one or both. You need to make sure however that there are extensions under the cover you choose to cover boarding up costs, scratching, and sign writing as these covers are not always automatically included.

Liability Insurance:

If you are a trades business and you employ subcontractors, you need to make sure you extend the cover to include them. Liability insurance premiums are generally calculated on your occupation, your turnover and the number of employees you have.

Employee Dishonesty Insurance:

This provides cover for loss of goods or money due to fraud or dishonesty of your employees.

Machinery Breakdown Insurance:

This provides cover for damage to machinery caused by breakdown (not wear and tear). This cover can also be extended to include loss or spoilage of food items if a fridge breaks down. Some insurers will also provide a cover similar to business interruption under this section. It is essential that you get the sum insured right on this section of a policy as if you need to import machines from overseas, costs can really blow out, not to mention down time.

Computers and Electronic Equipment Insurance:

This provides cover for fire, theft, accidental damage and breakdown. It also covers business interruption for computers and electronic equipment that you want specified in your policy or that are portable in nature.

General Property Insurance:

This cover has many options but put simply, it is designed to cover contents that are moved around such as tools of trade or other professional equipment. Cover can include fire and perils, theft and accidental damage.

Tax Investigation or Audit Cover Insurance:

Two distinct covers exist, one is tax audit only which covers the expenses incurred by your business for professional fees of your accountants when the Tax office decides to Audit your business.

Audit cover is a broader approach and covers more government agency audits such as Work Cover and the like.

Whatever business insurance policy you decide to take to insure your business, you need to make sure you understand what is and, more importantly, what is not covered, to ensure you don’t end up kicking yourself in the event of a claim.

The in's and out's of Window and Door MFG Insurance.

Mon, 15 Jul 2019 03:44:09 GMT

Bad Puns are Free

Window and Door Manufacturers are some of the busiest trades in Australia today. When your products are the very thing that makes a home complete, you deserve the same level of wow factor when it comes to your insurance policy.

We have put together a policy specifically for your industry and would love to help you open the door to better insurance.

With one policy you can include cover for:

Buildings
Contents
Business interruption (loss of income for your business)
Theft cover
Stock in trade
Customers goods
Public & Products Liability
Marine Transit Cover (cover for your windows and doors on the way to site)
General property insurance to cover tools in your vehicles.
Glass cover (for your buildings and displays)
cover for signage

We can also cover:

Custom Glass and Window Trailers
Car Signage
Custom trays for utes and trucks
Private Motor
Home and contents (great staff benefit)
corporate travel insurance

To find out more about how we can help you, please complete the form below and we will get in touch to go over how we can help.

5 Top Tips to get the best insurance policy

Mon, 25 Mar 2019 00:37:11 GMT

Simple and smart solutions to save wasting money

1. Is the cover Correct? - There is no point having it if it does not cover you!

Strangely often overlooked, this is number one as it is by far the most important. Let's be honest, there is no point paying for an insurance policy if it is not going to cover you for what you need.

The following are some of the key things to check as they may affect you in unexpected ways come claim time.

Under Insurance Clauses
Definitions of Stock and Contents (this varies from insurer to insurer)
Geographic Limitations
Legal Jurisdictions
Policy exclusions (make sure you check all sections of the policy)
Words With Special Meanings

2. How is the Claim Service? - This is really what you pay for.

I can unequivocally say that some insurers are brilliant when it comes to claims and others... not so much. Where does your insurer stand on this? Does the claim manager have decision authority? Are they likely to appoint an external assessor? Do they have a "no pay culture" or do they do what they are there for?

Claims Service is ultimately what you pay for so make sure you have an insurer that understands this.

3. Is the price right?

Like most things, you get what you pay for so you need to understand that insurance policies from one insurer to another are different. Getting a multi policy discount can sound fantastic but remember the discount is only of that insurers price. We often see other insurers non-discounted price being substantially cheaper than the discounted policy given in a multi-policy discount.

On the flip side, many insurers only sell an extremely basic policy with strict conditions that may make paying a little more for a policy that offers broader coverage well worthwhile at claim time. Make sure it is right!

4. What are the qualifications of the person giving you advice? - like any profession, it makes a difference.

In most cases when dealing direct with an insurance company, you get to speak to someone who has had maybe 2 weeks training in that insurers products only! They have no idea if their policy is appropriate for you and are unable to tell you if there is a better one out there.

You also need to understand where their legal obligations lie. If they work for an insurer or are an agent of one (this usually includes banks, car yards, and any office with the insurers name as the main one), they are legally obliged to work in the best interests of the insurer.

Brokers on the other hand are legally obliged to work in the best interest of their clients. They also need to undergo strict training in all areas of insurance before they are able to give any advice to a client.

It may seem a simple thing but it makes a huge difference when you need to claim.

5. Do you know who to talk to if you need to make changes? - service matters

As I have said throughout this article, you pay for insurance to protect you when you have a claim. Having a claim is stressful and can be frustrating when you have to tell the same story to multiple people over and over.

Make life easy and find a professional that you trust. Then they will be your single point of contact for any changes and all claims. It's always easier knowing you can just let your adviser know what you need an know that it will be taken car of rather than spending hours on hold waiting on a call centre.

Don't Forget, Claims Are All Part Of The Service

Tue, 19 Feb 2019 23:36:06 GMT

19 year old Sarah had just got her first full time job and was absolutely loving life as only a 19 year old can.

Sarah was driving home after work in her first car when she had to swerve to avoid a Kangaroo that had jumped onto the road in front of her.
Unfortunately for Sarah, this swerve ended up in a culvert with her pride and joy upside down with her inside it.

Luckily, Sarah was Uninjured. Definitely shaken up, but Uninjured. Her Father called me from the scene of the accident and we organised a tow and lodged a claim with the insurance company.

We all assumed the car would be deemed a total loss and a week or so later, this was confirmed and we waited on the assessor to make a settlement offer on the market value of the vehicle. It is worth a side note here that”market value” is defined roughly as the cost to replace the vehicle of the same make and model and in the same condition as it was prior to the loss.

Now a growing trend I have noticed is that assessors tend to try and bypass brokers nowadays, even though our clients employ us to manage their insurance, they tend to try to avoid us. I can only assume it’s because we tell them they are wrong more often then not and make them do their jobs properly. This was the case here. The assessor contacts Sarah and told her the market value of her 2005 Mazda Tribute was $2400. By the time the excess was taken off, Sarah would have been paid $1200.

After Sarah contacts me about this I give the assessor a call to discuss this offer. They tell me they have got the value from some industry book I have never heard of (I have been in the insurance industry for over 18 years) and that is the final offer as per the terms of the policy.

I think this is why the assessors don’t like talking to us brokers as telling me this is the final offer when I know it’s wrong is like waving a red flag at a bull.

After referring them to the definition on Market Value in the Product Disclosure Statement (as defined above) I also forward current for sale adverts for the same vehicle as Sarah’s. After a little hounding the claim is settled on a market value of $5,500 less the $1200 excess giving Sarah $4300 to go towards a replacement vehicle. That nearly $2000 more than the total of the original offer that is now in Sarah pocket.

TESTIMONIAL FROM SARA'S PARENTS

"When our 19 year old daughter had a car accident late last year the initial offer from the insurance company would not have replaced her car with a like vehicle. Brett from AFOOFA consulted with us, researched the market value of the car and negotiated with the insurance company until he achieved a result that saw a significantly increased payout, a payout that exceeded our expectations and allowed our daughter to purchase a comparable car. We couldn’t be happier with the outcome of the claim and highly recommend AFOOFA for professional, client focused, friendly insurance services. "

The Under Insured Importer And The Tricky Insurance Clause

Tue, 19 Feb 2019 22:56:28 GMT

David and Sarah were a typical Australian business. They had taken a risk and started an auto parts import business sourcing their parts exclusively from two International suppliers.

They had taken out insurance when they started and were aware enough to know that their business would suffer if something happened to their suppliers so the took out a suppliers premises extension on their Business interruption cover. From here they worked hard and built a successful business employing 15 people and servicing businesses across Australia.

Fast forward 5 years, business is booming and David and Sarah decide it is time to start making plans for the future. David and Sarah talk to their financial planner, who, being very good at their job, also asks them about their general insurance for their business and when it was last reviewed. Like so many businesses in Australia, David and Sarah had not reviewed their insurance since the day they had taken it out and just paid the renewal premium when it came in.

Their Financial planner immediately gave Brett at AFOOFA Insurance Brokers a call and organised a time for a thorough review to be conducted.

It only took a few minutes talking to David and Sarah for everyone to realize that they were under insured by millions and the policy they had continued to roll over literally offered them no cover under their property and business interruption sections due to the under insurance clause in their policy.

After doing the calculations and going through the stock levels we found that their stock was under insured to the tune of $850,000

On reviewing their business interruption insurance, we found that (taking projected growth into consideration) they were under insured by approximately $5,000,000. What is worse however is that the cover that they had had the foresite to take out to protect them in the event of damage to their suppliers premises had a tricky little clause that would only cover suppliers in Australia! As you recall they exclusively source parts from 2 overseas suppliers.

Needless to say, we corrected the insurance and now conduct regular reviews with David and Sarah to ensure their empire is insured correctly so they have the peace of mind of knowing their insurance policy will respond when they need it to.

Why Your Local Business Should Have Business Interruption Insurance

Wed, 30 Jan 2019 01:39:18 GMT

An Unforseen Setback Doesn't Have To Mean Financial Ruin For A Small Business

Business owners deal with many professionals in order to keep their business running, growing and healthy and to get their business back to running, growing and being healthy after a setback such as a fire or ill health. Some of these, like solicitors, they use irregularly. Others, such as Accountants, Financial Planners and Insurance Brokers, they talk to on a regular basis, in some cases weekly and in certain circumstances, daily or more.

The thing all these advisers have in common is they are all there to help their clients succeed in their business and ensure continuity and they all apply best practice to do this.

Although these advisors all have their client’s best interests at heart and are all qualified professionals in their field, it is very rare that there is a thorough understanding of exactly how the other professionals their clients deal with help with the running, growth, health and protection of the business.

As an insurance broker, I see many clients whose insurance is considered a necessary evil and simply listed as an expense on the financials as there is no appreciation of what it is actually doing to ensure continuity of the clients business as well as re instatement of assets. As Accountants and Financial planners you are there to ensure that your clients business can grow and build wealth in both assets and quality of life. As insurance brokers, we are there to make sure clients are able to not only keep or replace those assets but also ensure continuity of the business and therefore continuity of their quality of life.

The purpose of this paper is to give you a better understanding of why a client needs more than just insurance to protect their assets and how a properly packaged business insurance policy can ensure that a client business continues after a loss and puts them back in the same financial position as they were before the loss occurred.

OVERVIEW

Business Insurance, although made up of many sections offering different covers can largely be broken into 3 broad categories. These are: insurance to protect your assets

Insurance to protect your business itself
Insurance To Protect Your Assets
Liability Insurance.

In this article we'll cover:

A brief overview of the sections to a common business policy, what they cover and which category they fall into.
Who should have Business Interruption insurance
What Business Interruption insurance actually covers
How to ensure correct sums insured

PROPERTY OR FIRE & PERILS INSURANCE - Protection For Your Assets

This is where you insure your buildings, contents & stock to cover them with Fire insurance, Storm insurance, Malicious Damage insurance, Accidental Damage insurance, Impact Damage insurance etc. As mentioned earlier, all insurance policies are different. Some insurers include stock under the contents section, some do not, some will cover you for flood, some will not, so you need to make sure you know what is covered before you take out a policy.

BUSINESS INTERRUPTION INSURANCE - Protection For Your Business Itself

This is a cover that is not well understood by many in the insurance industry let alone you as a business owner. The basic idea of this cover is to insure the loss of or shortfall in income that results after an insured loss (ie you can’t trade for 2 month after a fire). The basic cover gives you protection of your gross income (this calculation is usually different in insurance than accounting) as well as fixed expenses for a chosen insured period. In order to have a comprehensive cover under this section it is well worth consulting an expert as there are many extensions you can add that save you heartache in the event of a claim.

THEFT & MONEY INSURANCE - Protection For Your Assets

Some insurance policies have these covers separate while others combine them. The cover in either case is pretty much the same. Theft is where you insure your stock and contents for cover for theft. You can often choose extensions to include theft without forcible entry and shoplifting as well.

GLASS INSURANCE - Protection For Your Assets

This cover seems self explanatory in that it covers breakage of fixed glass but, has more to it then you may think. Glass cover is generally split into two options; external cover for windows and doors and internal cover for display cabinets and fridges etc. and you can choose to insure one or both. You need to make sure however that there are extensions under the cover you choose to cover boarding up costs, scratching, and sign writing as these covers are not always automatically included.

LIABILITY INSURANCE - Liability Protection

This is another one of those covers that seem straight forward but can be more complicated than you think. Liability insurance is to provide cover for your businesses legal liability in relation to property damage or personal injury to a third party resulting from you conducting your business. Pretty straight forward so far, but, if you are a manufacturing business or import products from overseas, you need to make sure you include a products liability cover. If you are a trades business and you employ subcontractors, you need to make sure you extend the cover to include them. Liability insurance premiums are generally calculated on your occupation, your turnover and the number of employees you have.

EMPLOYEE DISHONESTY INSURANCE - Protection For Your Assets, Protection For Your Business Itself
Covers you for loss of goods or money due to fraud or dishonesty of your employees.

MACHINERY BREAKDOWN INSURANCE - Protection Of Your Assets, Protection Of Your Business Itself

Damage to machinery caused by breakdown (not wear and tear). This cover can also be extended to include loss or spoilage of food items if a fridge breaks down. Some insurers will also provide a cover similar to business interruption under this section. It is essential that you get the sum insured right on this section of a policy as if you need to import machines from overseas, costs can really blow out, not to mention down time.

COMPUTERS & ELECTRONIC EQUIPMENT INSURANCE - Protection Of Your Assets, Protection Of Your Business Itself

Provides cover for fire, theft, accidental damage and breakdown as well as business interruption for computers and electronic equipment that you want specified in your policy or that are portable in nature.

GENERAL PROPERTY INSURANCE - Protection Of Your Assets

Once again this cover has many options but it is designed to cover contents that are moved around such as tools of trade or other professional equipment. Cover can include fire and perils, theft and accidental damage.

TAX INVESTIGATION OR AUDIT COVER INSURANCE - Liability

There are two distinct covers here, one is tax audit only, which covers the expenses incurred by your business for professional fees of your accountants when the Tax office decides to Audit your business.

Audit cover is a broader approach and covers more government agency audits such as work cover and the like.

SHOULD YOU HAVE BUSINESS INTERRUPTION INSURANCE?

If you tick any of the following, you should seriously consider business interruption insurance unless you have vast cash reserves and can afford to fund your own business recovery.

I or my business owns commercial property
My Business is a manufacturer, wholesaler or retailer
My business relies on key stock, equipment, supplier(s) or customer(s), which is not able to be immediately replaced
My business is financed by DebMy Business would lose revenue if unable to operate from our existing building
My business could operate after a loss, but there may be significant increased costs
It would be difficult to find alternate premises
Our staff are key to the future success of the business
My business does not have a Business Continuity Plan
My Business is seasonal – we cannot afford to lose our peak season
My Business relies on utilities

KEY EXAMPLES TO REMEMBER

1,170 people lost their jobs following the storm in Newcastle in 2007 due to the fact that their employers business failed to reopen as a result of not having business interruption insurance

Business have a 10% chance of surviving following an insured event without business interruption cover but only 40% of Australian business have business interruption insurance of any sort

WHAT DOES BUSINESS INTERRUPTION INSURANCE COVER?

The simplest way to explain this is to say it is like a personal accident or income protection insurance for a business.

If a business is unable to trade due to an insured event, then the business interruption insurance is activated to protect the net profit and ongoing expenses of the business such as wages, rent, finance repayment etc..

A business can also have a loss of insurable gross profit in the form of a reduction in turnover or increased costs insured in order to keep trading through the interruption to the business.

You can also cover business interruption through disruption of public utilities, loss of access, loss of attraction, murder or suicide, closure by public authority, damage to supplier’s premises and much more.

It is imperative to remember that in order for these things to be covered, the cause of the interruption needs to be insured by the material damage or fire and perils section of the policy. It is a loss because of these causes that triggers the business interruption section.

HOW TO ENSURE THE CORRECT SUMS ARE INSURED

Every insurance company has a slightly different way of covering and calculating the sums insured for the Business Interruption Section of a Business Insurance Policy. In order to ensure correct cover is in place, the best way is to view a copy of the insured’s most recent financial statements to ensure we have the correct opening and closing stock values, gross profit figures, wages and uninsured expenses like office consumables that would not be incurred while the business in not operating.

These figures then need to be adjusted for the insured period (could be 6 months, 12 months, 24 months or more) as well as the expected growth for the insured period and up to the start of the insured period.

As a general rule, wages should always be included in the Gross Profit sum insured rather than insured separately as this way they will be fully covered rather than apportioned over time.

IN SUMMARY

Business Interruption Insurance is an extremely important class of insurance for any business as it is the key to ensuring the business survives after an insured loss. Yet it is one of the least taken up covers by the average business in Australia.

In Australia we have a focus on the protection of our assets. This is largely due to financial institutions insisting that mortgaged assets be protected in this manner. This has developed an insurance culture where we believe this is the best way to insure and protect our business. The reality is, although insuring our assets is important, asset insurance only is the best risk mitigation for the financial institution but not necessarily for the insured themselves.

5 Reasons You Should Review Your Business Insurance Policy Today

Wed, 30 Jan 2019 01:39:18 GMT

Are you exposing your business to the risk of being underinsured

Getting the right type and dollar amount of business insurance is a critical part of setting up any new business. However, once you have your policies in place, and are focusing on the day to day running of your business, it’s really easy to forget all about your insurance coverage. This can be a huge mistake however – several years might go by without revisiting your insurance policies, and you could easily expose your business to the risks of being underinsured.

There’s an easy fix though for avoiding the above scenario. Review your insurance policies on an annual basis, and you’ll always be up-to-date and fully covered. In case you are still in need of some convincing, here are 5 questions to help you decide if you need to review your policies. If it’s been a while since your last business insurance review – or if you’ve never had one – read through these and be honest with your answers. If you can answer “yes” to any of these questions, you’ll want to review your policies sooner rather than later.

HAS YOUR BUSINESS GROWN SINCE YOU FIRST STARTED IT?

If your business revenue has increased, so has your potential liability. If you sell more goods, you most likely have more supplies, equipment and inventory – it’s important to make sure everything is covered. In addition to increased revenue or inventory, it’s important to consider whether or not you also have more employees, as this could impact your worker’s compensation insurance needs.

2. HAVE YOU CHANGED OR ADDED A LOCATION?
If your business has grown, it’s possible you moved to a bigger facility or a different location that better suits your business’ increased demands for space or efficiency. Square footage, and the type of building you’re in, could change the type and amount of insurance you need.

3.HAVE YOU OR YOUR BUSINESS PURCHASED ADDITIONAL PROPERTY?
If you’ve bought new or more equipment, updated your technology, or added / eliminated other items from your business’ location, you’ll want to check your commercial property insurance limits. It’s also smart to determine whether you’ll be compensated for replacement value, or actual cash value. And if you have new or more vehicles on hand with which to conduct business, do you have enough commercial auto coverage?

4.DOES YOUR BUSINESS STILL RUN THE SAME WAY SINCE INCEPTION?
Times change – and so do business practices. You might be using different technology today than you were five years ago, or you might be marketing and advertising differently as well. And you might be storing data differently – for example, do you store any customer records in the cloud? Or do you have more customer and employee information stored digitally? This could make you more vulnerable to data theft or hacking. Does your current insurance policy cover these kinds of losses? It would be worth finding out.

5.IS THE MANAGEMENT TEAM THE SAME?
Employees come and go, even the ones at the top. If your management team has changed, it’s possible you need to review certain aspects of your insurance coverage. If you have Key Person strategies in place, or Buy Sell Agreements, or even a Deferred Compensation plan, and a crucial member of your management team has changed, you could be leaving yourself and your business open to huge liabilities or unplanned consequences.

6.DO YOU HAVE NEW PRODUCTS OR OFFER?
Is your business offering different services or products than it did when you started out? Part of adapting to changing economic and cultural landscapes is adapting your offerings to stay current and profitable. Some types of insurance may not cover certain products or services; it all depends on the type of coverage you have. It’s wise to make sure that your current insurance policy addresses, and adequately covers, the lines of business that are most crucial to your livelihood.

You Have Been Warned This Story Has A Sad Ending!

Tue, 01 Jan 2019 00:00:00 GMT

The Right Advice From The Right Advisor

Katheryn owned a retail furniture store in Melbourne. It was a new business and she contacted AFOOFA Insurance Brokers to help her put together a business insurance package. As we always do we explained the importance of insuring contents and stock for the correct values due to the under insurance clause. We also stressed the importance of what we believe to be the most important part of a business policy, the business interruption section, or, as we explain it “income protection for your business”

Katheryn took our advice and asked us to put together a policy covering her business comprehensively. Being a new business we understood that money can be tight so we sourced a policy that covered her for everything she needed but without being ridiculously expensive.

Being a new business, Katheryn asked us to give her a final quote with a premium breakdown for each section so she could show her accountant before she took out the policy. It is worth noting here that the total policy cost approx $2500 and the Business interruption section cost approximately $900 of that $2500.

On viewing this breakdown, Katheryn’s accountant advised her that the business interruption was too expensive and that she should remove the cover before she took out the policy.

Unfortunately for Katheryn, she took her Accountants advice and, against our advice, got us to remove the business interruption cover before we put the policy in place.

Fast forward 3 months and Katheryns business is flourishing. She is turning over $7-10,000 per day and life is looking great. That is until a massive storm cell hits Melbourne and Katheryns shop is flooded with water causing her to be closed for nearly 5 weeks while stock is replaced and clean up is carried out.

Katheryn makes a claim and the replacement and clean up is all covered. It is here we need to remember though, that Katheryn’s accountant told her that $900 was too expensive for business interruption cover and she did not take that cover even though we at AFOOFA advised her too.

Katheryn lost over $200,000 in income due to the storm stopping her ability to trade. Had she taken our advice and spent the $900 on Business Interruption cover, that income would also have been covered in her claim.