Prepping your insurance this new financial year.

The small-business sector was hit hard by the pandemic. The Reserve Bank of Australia found the sector was disproportionately affected by COVID because these businesses are more likely to be in industries that were affected by restrictions on movement, such as cafés and restaurants, as well as arts and recreation.

If your business was more permanently affected by COVID constraints, it’s time to map out the major shifts that have happened in it such as staff changes and moving into different premises. These changes may affect the amount and type of insurance you need.

Update your business plan and strategy

It’s time to update your business plan once you’ve mapped out any new risks. This will include your risk-management strategy. As part of your plan, include your sales pipeline and projected revenue. Knowing what’s coming up regarding future sales gives you an idea of how your business is likely to perform and this will be a factor in determining the amount of insurance cover you need.

Creating a budget and cash-flow forecast is another important management tool that should form part of your plan. It enables you to see at a glance what you need for your day-to-day commitments and helps you understand and plan for any gaps. These types of forecasts also help you make informed decisions about future expenditure.

Know what you can claim

Make sure you understand which insurance is tax deductible . While your Highview accountant is in the best position to help with this, generally the ATO allows you to claim a deduction for most operating expenses in the same year you incur them. When it comes to insurance, you are generally able to claim for cover such as fire, professional indemnity, public risk and workers’ compensation.

Is your insurance right for you?

When reassessing your insurance, it’s important to know if it’s fit for purpose. Steadfast Broker Technical Manager, Michael White, says any physical property needs to be reviewed to ensure the sum insured is correct. “There are online tools you can use to calculate the replacement cost for buildings,” he says.  The sum insured needs to be the replacement value of the building, not its market value.

White adds that ideally, a valuer or a quantity surveyor should be used to prepare a more detailed calculation. “Don’t just pluck a sum out of the air, which is what many people do,” he says. “And don’t just roll over the figure that you had from the previous year and add a minor increase for inflation. The costs of building works are going up significantly and this needs to be reflected in your insurance cover.”

There are risks to undervaluing your property or not increasing the amount you insure it for, he says. “The main one is that in the event of a catastrophe, such as a fire, you won’t have enough cover to rebuild.”

Start a conversation today…

Zoe Munro, Highview’s Principal Insurance Broker can help ensure your insurance cover will protect you in the event you need to make a claim. Contact Zoe today to find out more by emailing zoe@highview.com.au

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