Introduction
This article serves as a brief reminder about an Employer’s insurance requirements in Queensland. Although many of the insurance types will be the same nationwide, if your business is not in Queensland, it is a good idea to check the rules in your state.
Buying insurance
You can buy insurance:
- Direct from an insurance company; or;
- Through a third party that arranges insurance, e.g. insurance brokers, insurance agents, banks, finance companies.
Most insurance companies or brokers offer package policies that combine different types of insurance, e.g. for professional offices and retail outlets, so you can kill many birds with one stone.
You can also ask that a standard policy be amended to meet your business's specific requirements, for example, you could ask for an extension from basic cover, e.g. a fire policy can be extended to include risks like earthquakes or floods.
Types of insurance
The types of insurance you may need include:
- Property insurance - compensation from loss or damage to property;
- Liability insurance - cover for legal claims against the business, e.g. for a personal injuries claim by a customer;
- Workers compensation insurance - cover for workers who are injured on the job;
- Loss of gross profit insurance - cover for loss of profit due to business interruption and;
- Disability insurance - cover for loss of income due to injury, illness or death.
Now we consider each in turn
Property insurance
This covers loss from theft, fire and other specified damage. It has a wide meaning and an cover anything agreed to between you and the insurer, e.g. cover for breakage to plate glass windows, hot water systems etc. It can also include consequential losses from damage (e.g. profits while you have to close the business during repairs).
Liability insurance
This includes:
- The well-known insurance called "public liability", which covers you for claims from third parties such as visitors as a result of your business operations. This would include claims for negligence;
- Product liability insurance, which covers you for losses or damage caused by faulty products supplied by your business;
- Professional indemnity insurance, which covers professionals for losses caused by giving the wrong advice or acting to the detriment of your clients;
- Indemnity insurance for company officers (e.g. directors) to cover for claims made against directors personally as a result of business operations.
Disability insurance
Covers you if you are forced to stop working because of an injury or illness. Generally the insurance pays a percentage of your gross salary during the period of disability.
Workers compensation insurance
Covers claims by employees for work-related injuries. Generally claims are made for loss of earnings, medical expenses and/or permanent impairment.
Loss of profits
Covers the loss of profits if the business is interrupted because of damage to property resulting from an insured incident (e.g. fire). It can also cover wages to employees and the maintenance of anticipated net profits.
Conditions to look out for
There are certain conditions that apply to most insurance policies. These include:
- The insured's duty of utmost good faith. This means that you must disclose to the insurance company anything that is "material" to the insurance contract, i.e. anything that would be relevant to the decision of the insurance company in its decision to issue the policy. This is often called the duty of disclosure. A good question to ask is: "Would this information affect the decision of a reasonably prudent insurer to accept the risk, or affect the level of the premium demanded by the insurance company?" For example, have you been refused insurance cover by another company? You are also required to be honest in any claims made on the policy, and cooperate with the insurance company; An insurance company can refuse to pay the claim if you were aware of the circumstance but you did not disclose it. This amounts to fraud;
- The insurance company's duty of utmost good faith. This requires the insurance company to promptly assess and pay your claims, and disclose any "material" facts that would be relevant in your choice of an appropriate policy;
- Having an "insurable interest" - to insure something you must have a legal interest in the thing you are insuring (e.g. you are the owner). For example, you can insure your workers, the business property, yourself, your business partner etc;
- Basic contract law provides that you can only recover your loss. So you can not make a profit from the claim against the insurance company;
- The insurer's must provide notice (usually 14 days or more) that the policy is due for renewal.
Exclusion clauses
These are clauses in the contract that limit the liability of the insurance company. For example, there may be limited liability if a theft occurs when windows are not secured according to the policy's requirement. You should get legal advice if the insurer relies on an exclusion clause, because it may not apply in certain circumstances e.g. the insurer may not have brought the exclusion clause to the attention of the insured – that’s you.
Disputes
Many disputes are about the duty of disclosure, when the insurer refuses the claim.
It is important to seek legal advice if you make a claim which is rejected. Avenues for dealing with the dispute include:
- Making a complaint in writing to the Insurance Enquires and Complaints Limited;
- The Insurance Brokers Dispute Facility hears disputes between the insured person or company and insurance brokers in certain circumstances.