www.business.gov.au

Insurance is an essential part of running any business. If you are operating a small business you need more than just property insurance. Taking out the right insurance will help protect your business and minimise its exposure to risk.

You'll need insurance for home office equipment, as well as consideration for issues relating to having clients in your home (what happens if they fall over in your house and injure themselves?).

Your insurance requirements will vary according to the type of business you are operating, but you should be aware that in Australia some forms of insurance are compulsory, such as workers' compensation and third party car insurance.

When you're in business you deal with a variety of potential risks each day. Risk is not something you can avoid, but it is something you can manage. Risk management will increase the probability of success and reduce the probability of failure of your business.

Some insurers offer insurance package policies specially tailored to cover your business needs. There are also individual products that may be relevant to the particular nature of your business.

To protect your assets and revenue-generating capacity, here are some of the types of insurance available:

Building and contents: Covers the building, contents and stock of your business against fire and other perils such as earthquake, lightning, storms, impact, malicious damage and explosion.

Burglary: Insures your business assets against burglary, and is most important for retailers or a business which maintains an unattended premises.

Business interruption or loss of profits: Covers you if your business is interrupted through damage to property by fire or other insured perils. Ensures your ongoing expenses are met and anticipated net profit is maintained through a provision of cash flow.

Fidelity guarantee: Covers losses resulting from misappropriation by employees who embezzle or steal.

Machinery breakdown: Protects your business when mechanical and electrical plant and machinery at the work site break down.

Motor vehicle: It is compulsory to insure all company or business vehicles for third party injury liability. Many different types of policies are available, so make sure you understand the options before making a decision. There are four basic options:

- Compulsory third party (injury) - covers you for claims made against you for personal injuries and legal costs arising from the use of your car. You must obtain this insurance to register your car.

- Third party property damage - covers your liability for damage to another person or to the property of others and your legal costs. It doesn't include repairs to your own car if you caused an accident.

- Third party, fire and theft - covers you against the events covered above, as well as fire and theft. It also insures against damage caused if your car was stolen.

- Comprehensive - covers you for all of the above plus damage caused to your own car by you in an accident. If you're buying a car on an instalment basis, financiers will usually insist on this cover.

Workers compensation: You must provide accident and sickness insurance for your employees - workers compensation - through an approved insurer. Workers compensation is covered by separate state and territory legislation.

Personal accident and illness: If you are self employed you won't be covered by workers compensation, so you need to cover yourself for accident and sickness insurance through a private insurer.

Life insurance: Some are investment-type funds where you contribute over a certain time and get back your investment plus interest earnings at the maturity date. Others are designed to cover risk - things that could happen to you.

- Income protection or disability insurance - covers part of your normal income if you are prevented from working through sickness or accident.

- Trauma insurance - provides a lump sum when you are diagnosed with one of several specified life threatening illnesses.

- Term life insurance or whole of life cover - provides your dependents with a lump sum if you die.

- Total and permanent disability insurance - provides a lump sum only if you are totally and permanently disabled before retirement.

If you are running a business or employing people, you are likely to have superannuation obligations to your employees. If you are self-employed you also need to provide for your retirement - superannuation is generally used to provide for a retirement plan.

Types of liability insurance you need to consider include:

Public Liability: Public liability insurance protects you and your business against the financial risk of being found liable to a third party for death or injury, loss or damage of property or 'pure economic' loss resulting from your negligence.

Professional Indemnity: Professional indemnity insurance protects you from legal action taken for losses incurred as a result of your advice. It provides indemnity cover if your client suffers a loss - either material, financial or physical - directly attributed to negligent acts.

Product Liability: If you sell, supply or deliver goods, even in the form of repair or service, you may need cover against claims of goods causing injury or damage. Product liability insurance covers damage or injury caused to another business or person by the failure of your product or the product you are selling.