Securing the right insurance

In deciding which policies, and what level of insurance to take out, a business needs to:

  • Decide how much the business can afford to pay for insurance without impacting on profit targets.
  • Assess whether the business has adequate back-up for key personnel, in the event of injury or other absences. If so, you may not need key person insurance.
  • Set a budget for insurance premiums after receiving advice and quotations from brokers or agents.
  • Decide on the critical areas of cover to remain competitive with other tourism businesses. For example, some contract services, such as running tours for schools or delivering corporate event management, may require some types of insurance to be in place, including public liability and professional indemnity . 

Do your research

An insurance broker who is experienced in business insurance may be able to help you undertake a risk assessment to identify the parts of your business that are most vulnerable and critical to your business continuity plan. The cost of insurance cover may be cheaper if you have undertaken a risk assessment and developed a risk management plan.

To ensure you get the policy that’s most suited to your business needs, research products provided by a range of insurance providers and read the Product Disclosure Statement carefully to ensure you understand exactly what your insurance policy covers and under what circumstances.

Business Insurance checklist

To help determine which insurance you need to protect your business, review the Business insurance checklist (30 kb)PDF

Types of insurance

Public liability insurance

Public liability insurance protects your business against legal liability for any damage or harm caused by your business to customers or the public. A single compensation claim can be high enough to cause your business to close.

Public liability insurance to the value of $10 million is standard in the tourism industry. Your insurance policy should note the range of activities you provide in your business. Also, if you subcontract any activities, you should ensure that your contractors have adequate Public Liability Insurance cover.

Home business insurance

For tourism operators who run their business from home, it’s worth noting that a home insurance policy may not cover your business operations. For example, it may exclude:

  • Public liability for customers visiting your home
  • Replacement of business equipment
  • Replacement of damaged or lost stock
  • Damage or loss of goods in transit

Find out from your insurer or insurance broker if you need additional cover. It may result in higher premiums or a request to upgrade certain services in your home, such as adding a safe. However, if you don’t discuss it with your insurer, it may render your policy invalid.

Business interruption insurance

Business interruption insurance provides compensation if an interuption to the business, such as a natural or manmade disaster, causes a reduction in profits. This kind of insurance is additional to basic property insurance, but for revenue losses to be covered, they must be seen to be a direct result of the type of property damage covered by your policy.

This type of insurance helps to ensure that:

  • Anticipated net profit is maintained
  • Continuing overheads are paid
  • Key employee wages are paid
  • In some cases, additional working costs are covered

Keep in mind

Some Victorian tourism operators discovered after the 2009  bushfires  that their level of business interruption insurance did not cover what they thought it did.

General policies will cover you for interruption to the business if your property is damaged and you cannot trade. However, in the instance where roads to your business are closed to traffic and visitors cannot get to your business, some policies will cover the resulting loss of trade and others will not. 

Consultation with insurance advisors has indicated that operators should look carefully at the fine print in their business interruption insurance policy and find out exactly what they are covered for. Most comprehensive policies would cover an insured business under both instances.

To make a claim, insurers would require an examination of your business financials and, for a claim in the instance of road closures, confirmation of the level of inability of customers to get to your premises (for example evidence that roads were blocked by authorities or roads dug up).

Last Updated 24th July 2017