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Protect the Future of Your Business

There are many demands on a business owner’s budget, so when the money is tight it can be tempting to skip some expenses to save a little cash.   Often you’ll tend to skip the outlays that don’t deliver an immediate return, like your insurance, and instead spend on things that can bring clients in the door and generate revenue, such as marketing and advertising.  However, being in business is risky business and all Migration Agents face risks that could threaten the livelihood of their business.  Which is why having the right insurance is an important part of being a responsible business owner.

This doesn’t mean that you need to get every type of insurance possible for your agency.  Instead it is about having the right insurance to help you to take away some of your business worries. Firstly, you should identify your risks and prioritise them, by considering the probability of something happening, along with the financial impact it would have on your business. Because some risks could cause a major disruption, while others might only be minor.

 If the probability of an event happening is low and the financial impact is low, you may decide it’s not worth insuring against.  For example, if the chance of a wild storm hitting your town and causing damage to your premises is low and you could easily manage the cost of repairs, you might decide against insurance in this area. In other words, if the chance is low and you can afford to replace your assets, you may be willing to "self-insure". 

Likewise, even if the probability of an event is higher but the financial impact is low, you might also choose to forgo insurance. A good example of this is portable valuables, such as mobile phones and laptops. The likelihood of having a portable item stolen, or being lost, damaged or misplaced could be relatively high, yet the cost of replacing them is much lower than say, having to replace all your office contents if they were destroyed.

On the other hand, you may want to seriously consider cover if the financial impact of an event is high - regardless of the probability of it occurring.  That same storm that destroyed your building and contents could also mean your business is not able to operate for weeks, or even months.  Could you manage the loss of income along with the cost of replacing everything, as well your ongoing expenses such as paying rent, utilities and wages?  If the answer is no, then having cover for your premises (if you own them), your contents, and interruption to your business could provide the financial support you need to keep on trading. Cover for business interruption is crucial to any business owner who has limited capital reserves. Ask yourself if you have enough capital to rebuild your business from scratch if a total loss occurred.

Equally important is considering cover for legal liabilities such as third party injury and property damage, and professional service mistakes. While the probability of such an event occurring is relatively low, the financial implications could be devastating. You don’t even need to make a mistake to face an allegation, yet the cost of defending such claims can run into thousands. Not to mention if you’re found liable the cost of compensation can be very unpredictable and potentially significant. As one Migration Agent discovered, a simple error on a Visa application ended up costing thousands of dollars after the client was forced to depart Australia and re-apply for a different visa. Fortunately the agent’s Professional Indemnity policy responded and the client was awarded $8,432.11 in compensation.

Having the right insurance will not reduce the risks your business is exposed to, but it will provide financial protection against losses that you otherwise may not be able to afford, so it’s worth ensuring you have the right insurance to cover your business against the risks it faces.

When deciding what insurance you need for your business consider the following areas:

1. Property and Assets – cover for physical premises (you own) and physical assets such as contents and fixtures.  Don’t forget your digital assets such as your website and CRM system.
2. Legal liabilities – Professional Indemnity insurance will protect you against incorrect advice you may give, as well as errors or omissions on Visa applications and late lodgement of documentation. Public Liability insurance provides cover for property damage or injury that may occur to your clients or members of the public as a result of your going about your business. 
3. Finances – cover for your business cash flow if you were to experience business interruption and also your own personal income if you were unable to work for a period of time due to an accident or illness.

At the end of the day it shouldn’t be about what you can afford to insure – it’s what you can’t afford to replace. 

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Guest Thursday, 19 April 2018
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