Buying Your First Insurance Policies: A Guide for Everyone

Compulsory Insurance All Entrepreneurs Need to Know About

In Australia, there are many types of insurance policy that business owners need to be aware of. These include policies which cover all of the usual business activities, such as public liability, theft, product liability, professional indemnities and policies designed to cover you in the event of employee fraud. In addition, there are some insurance policies which are compulsory if you belong to certain professional bodies or operate in certain areas of business.

Despite all these types of insurance, there are only two compulsory insurance requirements needed by entrepreneurs under Australian law. They are concerned with workers' compensation and third-party vehicle cover. Let's look at each in a little more detail.

Workers' Compensation Insurance

Although it is compulsory to contribute to a workers' compensation insurance scheme, this is something that only affects you if you employ people in your business. Sole traders do not need to buy this sort of business insurance. Each state has its own regulations, so it is worth checking with the authorities in your location. In Queensland, for example, it is possible to find a compliant policy via their website. The state's WorkCover insurance programme is also responsible for auditing insurance companies that run compliant schemes.

Essentially, this sort of policy protects your employees in the event of an industrial accident at work or if they suffer from sickness. Given that payouts can be relatively high in the event of certain accidents, this sort of compulsory insurance often offers exceptional value for money.

Compulsory Third-Party Cover

Again, although it is referred to as a compulsory form of insurance for businesses, entrepreneurs only need to take out third-party cover if they operate a vehicle as a part of their company's activities. If no vehicle is used, then no third-party cover is required under law. This sort of vehicle insurance covers you for claims made against the business from any injuries that might arise from the use of your car. For example, if an employee were to suffer a neck injury when driving your business' car, then the policy would cover you and protect the business from any ensuing personal injury claim.

Many business people will choose to have a more fully-fledged vehicle insurance policy, but this is not a legal requirement. Third-party cover deals with the essentials of business-based travel. Once more, differing regulations are to be found in each state, so specific advice should be sought, especially if you travel between states. For more information, contact a business such as Westralian Insurance.