When arranging business insurance, your broker may ask many questions.
Some will be straightforward, such as the business address and annual turnover. Others may be more detailed and relate to contracts, previous claims, subcontractors or the exact work performed.
These questions are not asked simply to create paperwork.
The information helps the broker understand the business, approach appropriate insurers and identify insurance options for the risks involved.
Your legal and trading details
The policy needs to identify the correct insured parties.
Your broker may ask for:
- The full legal entity name
- Australian Business Number
- Trading names
- Business addresses
- Names of directors or business owners
- Related entities that may need to be insured
- Details of financiers or other interested parties
A trading name is not necessarily the legal entity operating the business. If the wrong entity is named, it may create complications when a claim occurs.
Advise your broker if the business structure changes or a new company begins conducting part of the operation.
A clear description of the business
A website or broad occupation title may not provide enough information to properly understand the risk.
For example, the description “consultant” does not explain what advice is provided, who relies on it or the possible consequences of an error.
Your broker may ask:
- What products or services do you provide?
- Who are your customers?
- Where is the work performed?
- Do you provide advice, designs or reports?
- Do you manufacture, import or sell products?
- Do you undertake any work at height or below ground?
- Do you perform any unusual or higher-risk activities?
- What percentage of revenue comes from each activity?
A detailed and accurate description helps reduce ambiguity.
Financial information
Insurers commonly request financial figures such as:
- Annual turnover
- Wages
- Payments to subcontractors
- Gross profit
- Stock values
- Asset replacement values
- Revenue earned from overseas activities
These figures help insurers measure the size and nature of the exposure. They may also be used to calculate the premium or determine an appropriate sum insured.
Provide the most accurate figures available and clearly identify whether they are historical results, current estimates or forecasts.
Employees and subcontractors
Your broker may need to understand who performs the work and how they are engaged.
Relevant details can include:
- Number of employees
- Employee occupations
- Use of labour hire workers
- Types of work performed by subcontractors
- Annual subcontractor payments
- Whether subcontractors maintain their own insurance
- How licences and qualifications are checked
Using subcontractors does not always remove the business’s exposure to claims arising from their work.
Assets, property and vehicles
To insure physical assets, your broker will need details of what the business owns, leases or is responsible for.
This might include:
- Buildings
- Contents and equipment
- Stock
- Machinery and plant
- Portable tools
- Computers and electronic equipment
- Registered and unregistered vehicles
- Customer property held by the business
Values should generally reflect replacement costs rather than original purchase prices or accounting values, subject to the basis of cover under the policy.
Information about construction, security, fire protection and natural hazard exposure may also be required.
Contracts and insurance requirements
Contracts can significantly affect a business’s risk.
Your broker may ask to review the insurance section of an important agreement, particularly if it requires:
- Specific policy limits
- Cover for additional parties
- Principal’s indemnity
- Waivers of subrogation
- Particular policy extensions
- Responsibility for liabilities that would not ordinarily apply
A broker can help identify insurance implications, but legal advice may also be required to understand the broader contractual obligations.
Claims and known circumstances
Insurers typically ask about previous claims, losses and incidents that could lead to a claim.
This information should be answered carefully and honestly.
A known circumstance may include a complaint, demand, error, incident or allegation that could reasonably result in a claim, even if no formal legal action has started.
Withholding information can affect the insurer’s assessment and may have consequences if a claim later occurs.
Qualifications, experience and risk controls
For some occupations, insurers may want to know:
- Years of experience
- Qualifications and licences
- Professional memberships
- Quality control procedures
- Standard contracts
- Record-keeping practices
- Workplace safety systems
- Cybersecurity controls
- Complaint-handling procedures
Good risk management can help an insurer understand how the business reduces the likelihood or severity of a loss.
Why accuracy matters
Insurance relies on the information provided to the insurer.
Incomplete or inaccurate information can lead to unsuitable terms, unexpected exclusions or difficulties at claim time.
If you do not know an answer, tell your broker rather than guessing. They can help clarify what is required and determine how the information should be presented.
The purpose of the questions is not to make the process difficult. It is to build an accurate picture of the business so informed insurance decisions can be made.
General Advice Warning
The information in this article is general in nature and does not take into account your objectives, financial situation or needs. Before acting on this information, you should consider whether it is appropriate for your circumstances and review the relevant Product Disclosure Statement or policy documentation.