Key benefits
- Reduced Stress: Knowing fixed business expenses are covered, like loan repayments and employee wages, allows you to focus on recovery, not financial worries.
- Tax Advantages: Premiums are tax-deductible.
- Peace of Mind: Contrary to popular belief, Business Interruption policies do not provide cover against health-related events.
Business Expense Insurance
A business expenses policy will provide the business owner with a monthly income benefit to cover the costs of fixed business expenses while they are unable to work.
Eligible Business Expenses
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Premises: Insurance, interest and fees on loans to finance the premises, property rates/taxes, rent, repairs and maintenance.
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Service Expenses: Electricity, internet, mobile phone, water.
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Equipment: Leasing or loan repayments on equipment, motor vehicle leasing, insurance of vehicles and equipment, registration of vehicles, repairs and maintenance.
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Salaried & Related Costs: Salaries of employees who do not generate any business income, their payroll tax and superannuation contributions.
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Fixed Contract Costs: Contracted maintenance costs for upkeep of your premises e.g. cleaning and security.
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Other Eligible Costs: Accounting and auditing fees, bank fees and charges, business insurances, professional association membership fees, regular advertising costs.
Benefits
Business expenses cover ensures funding for fixed expenses up to 12 months if the owner is ill or injured. Other insurance should be considered for long-term inability to work. For further information, click on the following link.
Case Study
Andrew and his business partner Tony run a successful veterinary practice, each earning a pre-tax income of $20,000 per month. Their partnership agreement states they are each responsible for 50% of the business’s total expenses of $16,000 per month ($8,000 each), leaving them with $12,000 each to take home. Both have income protection insurance that covers 70% of their respective incomes but lack business expenses insurance to protect their share of the business expenses. As a result, the following table outlines the potential impact if Andrew becomes injured or ill.
| Andrew (per month) | Tony (per month) | |
| Business income | $0 | $20,000 |
| Income protection benefit | $8,400 | $0 |
| Less share of ongoing business expenses | ($8,000) | ($8,000) |
| Pre-tax income (after business expense) | $400 | $12,000 |
Andrew’s income will decrease to $400 per month, limiting his ability to cover his family’s living expenses. As a result, he may have to draw on personal savings or sell assets.
The next table outlines what would happen if Andrew was injured or became ill and both he and Tony had taken out:
- income protection insurance to protect 70% of their respective incomes, and
- business expenses insurance to cover 100% of their share of business expenses.
| Andrew (per month) | Tony (per month) | |
| Business income | $0 | $20,000 |
| Income protection benefit | $8,400 | $0 |
| Business expense insurance benefit | $8,000 | $0 |
| Less share of ongoing business expenses | ($8,000) | ($8,000) |
| Pre-tax income (after business expense) | $8,400 | $12,000 |
To schedule an appointment and find the right insurance solutions to protect your business and personal goals, please click on this link.
