17 December 2020
- ASIC has written to insurers in Australia calling on them to consider action ahead of the imminent La Nina event season – La Nina event seasons have an increased likelihood of flooding, cyclones and hailstorms
- Research commissioned by ASIC following the Townsville floods of 2019 showed some small businesses weren’t covered for flood despite parts of Townsville being flood prone
- Now is a good time for you to check that your small business insurance covers you for your natural disaster risk – particularly in the event of a flood or bushfire
What does your business insurance cover?
As a small business owner, you may have considered and taken out insurance cover for risks such as public liability, workers compensation, business interruption and property and contents.
ASIC undertook consumer research that shows many consumers, including small businesses, were not aware of the limitations of their insurance cover. This can lead to underinsurance.
You can help reduce this risk by checking your insurance and seeking advice to ensure you have the cover you want to cover the risks of damage from a natural disaster. With the storm, cyclone, flood and bushfire season approaching, now is a good time to do this.
ASIC’s consumer research
In 2020, ASIC commissioned consumer research on the experiences of 251 small business insurance policyholders in Townsville, Queensland, affected by the 2019 floods (which is approximately 5% of the small businesses in Townsville). The research shows that many consumers were not aware of key limitations in their insurance coverage and were at risk of being underinsured for a natural disaster such as a flood.
We also researched the experiences of 100 consumers with home or car insurance affected by the 2020 Canberra, ACT, hailstorm, and found that only a few consumers were confident about precisely what their home or contents insurance covered.
You can read the letter that ASIC wrote to insurers on 17 December 2020 setting out the findings of our research.
If you need advice for your business insurance needs, speak to a trusted adviser such as an accountant, financial adviser or lawyer, or contact your insurer direct. Seeking trusted advice early can help you to better understand your options.
Help is available (at no cost) from a specialist financial counsellor at the Small Business Financial Counselling Support Line website or phone 1800 413 828.
- ASIC’s small business hub
- ASIC’s Moneysmart insurance resources
- Business.gov.au has information for businesses on how to prepare an emergency management plan which is included in their what to do in an emergency section of their website
- Australian Financial Complaints Authority: Info for small business
ASIC is Australia’s corporate, markets and financial services regulator.