All business will insure their business against loss. This is normally a big expense for a business. It is a contract between 2 parties – the insurer.

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Presentation transcript:

All business will insure their business against loss. This is normally a big expense for a business. It is a contract between 2 parties – the insurer and the insured. The insurer will take a payment called a premium to insure the insured against loss or damage to property. A business may take out more insurance than you or I would.

Types of Insurance for Businesses Motor vehicle Workers compensation (WorkCover) Public and product liability Industrial special risk – accidents, floods fire etc..) Income protection insurance

Workers Compensation Insurance If you employ someone – you may be liable for injuries occurring at work. In South Australia the name for workers compensation insurance is WorkCover. The premiums are based on the remuneration paid to their employees and their premium rate.

Remuneration is the amount of money that the employer pays in wages to employees. Remuneration includes: Gross wages Salaries Bonuses Annual leave loading Commission Allowances Back Pay Super payments Fringe benefits

Remuneration does not include: Termination payments Reimbursement to employees for specific expenditure. The Premium Rate is assessed by WorkCover. It is calculated on the risk involved in a certain business. The higher the risk – the higher the rate. Rates range from 0.4% to 7.5%

WorkCover also has a bonus and penalty system. If your company has a history of bad claims and poor workplace safety – then you will get a penalty and visa versa. There is also a occupational health safety and welfare (OHS&W) fee of 1% of the levy. If you get injured at work – the employer pays the first 2 weeks and has the option of paying the full amount to stop a penalty.

Income Protection Insurance Many workers guard against sickness or injury sustained at work that may stop them from getting an income. Self employed people will take this insurance to cover themselves at a pre-agreed level whilst they are unable to work. The insurance is tax deductible. Premiums depend on age, sex, occupation and the rate of cover. They are usually stated in a rate per $ m

Wage and Salary Costs When someone is employed – the cost to employ them is not only their wage. There are sometimes extra costs referred to as salary on-costs. » Super – 9% » Payroll Tax » Workers Compensation » Annual Leave – not for casual workers » Annual Leave Loading – 17.5% » Sick Leave 10 days per year – full time worker » Long Service Leave The cost of taking on another worker is usually 20%- 25% of their gross wage.