Insurance can be a significant cost for most cabinet makers. It is therefore important that you consider prioritising your insurance spend on a “must-have basis”.
There are three primary loss events that are considered to be catastrophic in nature and would therefore require “must have” insurance covers. These include: property, business interruption and legal liability cover.
Below is a short description of each of these covers;
Property & Equipment Insurance
A cabinet maker depends on thier tools and workshop to operate their business. In the event of a loss, the capital expense of replacing tools and equipment can cripple your business.
Whether you own your workshop premises, lease or have mobile workshop, you’ll need some sort of property insurance for your tools, vehicles and machines.
Business Interruption
Business interruption insurance is often misunderstood or insured incorrectly. Having the right cover and sum’s insured can be the difference between a business getting started again after a major loss or disappearing.
If you manufacture or import cabinetry then we would consider this to be one of the three most important covers in your insurance program. The policy provides ongoing cash flow and covers the additional expenditure that may be incurred if the business is unable to operate at its usual capacity following an insured event. Some equipment, such as CNC machinery can take months to replace due to shortages of equipment in Australia or delays in importing from overseas. Even after replacing all the damaged property and stock you may find a reduction in sales for an extended period due to customers finding alternative suppliers during your downtime.
It is always helpful to have a contingency plan when deciding on the level of coverage required.
Liability Insurance
Public Liability insurance protects you against property damage or personal injury claims arising from your business.
Cabinet makers often insure for public products liability exposures. However, there are numerous other “legal liability risks” that a business owner or manager faces that are often overlooked. Some of these risks include:
Statutory Employment Breaches such as wrongful dismissal, sexual harassment, bullying and discrimination issues that can arise in workplaces from time to time.
Misappropriation Of Trade Secrets such as alleged misappropriation of confidential information from a previous employer including customer names and contacts, designs or even employee files.
Theft / misappropriation of funds by an employee working for you. (NB this is not typically covered by a Burglary policy)
Occupational Health and Safety Fines or Penalties from work injuries to employees
Tax Audit costs incurred to engage your accountant to comply with an ATO audit.
To find out more about your insurance considerations and to create an insurance program tailored to your business needs, contact Allsafe broker today.
