Management Liability for Not-for-Profit Organisations
Australia has about 60,000 registered not-for-profit organisations, according to the Australian Charities and Not-for-Profits Commission (ACNC).
Is your small business among the one in four that say they’ll go under if faced with a liability claim? That’s the alarming statistic from one insurer’s survey.
More respondents said they would:
At the crux is understanding the cost of and whether you would be able to fund the costs of legal action due to injury or loss of damage to third parties arising from your business operations. If not, it’s time to look into insurance.
Small businesses may find themselves in a tight spot when it comes to ensuring coverage for an event (fire, flood etc) that causes damage or business interruption to the business.
Having inadequate cover to protect your operations could put you out of business. Underinsurance, or having the incorrect cover, relies on you having funds to address shortfalls in the event of an adverse event or claim. If you don’t have the cash flow, capital or retained profits to do so, that could seriously interrupt your operations.
It’s vital to know the difference between the ‘insured amount or limit of liability’ and ‘total declared value’ of an insured asset.
For instance, you may have insured your building premises for $1.5M, but need $2M to replace it totally. Insurers understand construction prices can vary, so add a 15%-to-20% margin to your policy. Even with that, you’re only insured for up to $1.7M. Insurers won’t look at that figure, but they will see you’re insured for a percentage of your property’s value.
It’s easy to underestimate the costs to fix, rebuild, or replace your contents or property, including:
Another issue is that some business owners don’t think the worst-case scenario could happen to them. Tap into your network to ask other operators about their experiences with underinsurance and how they dealt with it.
Using a quantity surveyor is a good start, but the key is conducting regular reviews of your coverage. This can help us point out any underinsurance risks. Policy fine print can change over time, meaning gaps in your coverage could emerge. Be clear on the distinction between accidental damage and defined events, too.
You may have changed your business operations, services/products, assets or premises, so need to reflect that in your coverage. Here are other reasons that would typically trigger a tweak:
Identify risks to your business and actively work to minimise their effects on your operations. Developing a robust business continuity plan will give you insights into how risks could affect your business and what to do to overcome interruptions.
Consider your business insurance policy package as something that adapts and grows with your business. We can help ensure you’re taking a comprehensive approach. Speak to us to ensure your assets are fully covered.
Article supplied by OneAffiniti
Photo by Fizkes on Unsplash