Common insurance misconceptions

As a business owner, you’re likely aware of how insurance can help protect your operations, yet many misconceptions persist about its value. Feeding into these myths can result in inadequate cover – or no insurance at all. WFI insurance are here to assist with any queries you have about your cover to ensure you understand your policy. 

Let’s debunk some insurance myths.

While it might seem cost-effective in the short term, the financial consequences of an uninsured loss could be serious. Consider the cost of replacing essential farm machinery that’s been destroyed by bushfire, or the legal expenses if you or your business became liable for a defective product or accident. Without insurance, these costs may fall entirely onto you.

Fact: The Insurance Council of Australia found that 12.8% of small businesses aren’t insured at all, while one in 10 small business owners admit they are underinsured for the value of their business assets. If the worst were to happen, the cost of not being insured may outweigh your business insurance premiums.

Another common misconception is that only businesses in high-risk industries, such as construction or manufacturing, need business insurance. While it’s true that these industries and those who operate rurally face heightened risks, every business – regardless of size or sector – is susceptible to risks that could result in financial losses. If you run a small business, for example, you could still be sued if a customer slips and is injured if you do not have the appropriate liability cover for your business.

Fact: According to data from the Insurance Council of Australia, despite rates of non-insurance dropping, there’s still more than 10% of small businesses that admit to being underinsured with respect to the value of their business assets. Given the average claim size for a sector like wholesale trade is $15,314.

Many people believe their home insurance policy will cover all possible risks. But the reality is that standard home insurance policies have exclusions and limits that could leave you exposed in certain situations. Flood damage, for example, isn’t always covered under standard home insurance, and some providers might require you to add it as an optional extra. WFI Insurance provides the cover, and an insured would opt out rather than opt in but is always best to check. For business owners, you also can’t rely on standard home insurance to protect your workplace, especially if the business is connected to the home – only business insurance will be able to help cover you for a range of potential risks.

Fact: Extreme weather is causing a wave of underinsurance in Australia, which is a major problem given that more than one million private properties (or about 1 in 10) have some level of flood risk. If it’s not included on your current home insurance or business insurance policy, speak with your insurer to ensure you understand your policy coverage. 

Many people avoid taking out an adequate level of insurance because of the cost to insure.  The cost of insurance can often be more affordable than expected, especially if you need to make a claim. If cash flow is tight or you’re dealing with seasonality in your business, there are ways to make insurance more affordable, speak with your local WFI representative to discuss your policy options. 

Fact: Depending on your business and insurance type, spending a few thousand dollars on insurance every year could save you tens of thousands – or even more – in the event of an eligible accident or natural disaster. According to Smart Company, citing recent KPMG data, the average quarterly premium for commercial vehicle insurance in Australia is around $1,825. But think how much you’d be on the hook for if your operating equipment where stolen or destroyed.