As a small business owner, do you really know what is covered under your insurance?
Not being clear about what type of insurance is appropriate, and the potential risks of not being covered are common mistakes, according to Michael Kuster from Commercial Associates’ Penrith office.
“Some business owners rely too much on their insurance, or do not have the right insurance,” he said.
“Take professional indemnity as an example. Some people may think it will cover any mistakes they make as a business owner, but it depends if they are found negligent, in which case they won’t be covered.
“Also, professional indemnity doesn’t cover day to day items such as not paying creditors,” he said.
“Professional indemnity is part of business, but doesn’t improve your situation just by having it – it doesn’t mean you can make any mistakes, even if seen to be small ones, and think you are automatically covered.”
He said that in general, directors are personally liable for paying business creditors; failing to do so leaves the directors liable for the cost. This is when personal assets may be used to repay the debt or come under threat.
Mr Kuster said the best way to protect family assets from business assets is to hold them in a trust as a separate entity.
“Each business and situation is different but some common benefits are distributing profits to beneficiaries, protection and eventually benefits when selling assets,” he said.
“A review by CAAA will ensure you are covered correctly and help you protect your family, business and assets.”