Business Expenses Insurance

Business expenses insurance is designed for self employed business owners, sole traders and partnerships and allows them to continue to meet their going business costs such as rent, leases, electricity and other overheads if they are unable to work due a sickness or accident.

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How does Business Expenses Insurance work?

Similar to income protection, Business Expenses Insurance generally pays you a monthly benefit, however the benefit is to cover your fixed business costs. In order to be eligible for this type of cover, you will generally be required to meet your insurers definition of being self employed.

How much will my monthly benefit be?

You can generally receive a monthly benefit of up to $90,000 per month, depending on your occupation category, with professional white collar workers and medical practitioners generally eligible for this maximum amount. You will need to prove these expenses to your insurer at claim time, with invoices reflecting the amount so it is best that you do not over insure yourself.

As different insurers may offer differ maximum benefit amounts and may cover different business expenses, it is important to consult with the relevant Product Disclosure Statement (PDS) before deciding on any income protection policy.

When will I receive my benefit?

You will start accruing the monthly benefit at the end of the waiting period, which will be 14, 30, 60 or 90 days depending on your occupation category and what option you have chosen.

Please note that certain occupation categories may have pre-determined waiting periods.

How long is the benefit period?

The benefit period is generally up to 12 months as it is designed to maintain your business while you recover or give you enough time to sell the business.

What expenses are covered?

Expenses Generally CoveredExpenses Not Covered
Accounting and Audit fees.Salaries and other related costs (e.g. payroll, tax, superannuation, FBT) for yourself and income generating employees of the business other then a locum
Regular advertising costs, postage, printing and stationery.Salaries and other related costs for any of your relatives or the policy owner unless that person was employed for at least 60 consecutive days prior to the disablement.
Electricity, gas, heating, water, telephone and cleaning costs.Commissions or bonuses payable to yourself.
Security costs.Repayments of principal of any loan or other finance agreement.
Rent, property, rates and taxes.Any costs of a capital nature including the costs of any books, equipment, fittings, fixtures, furniture goods, implements, merchandise or stock.
Membership fees, publications and subscriptions to professional bodies.Depreciation on real estate.
Bank charges, interest on business loans.Losses on investments.
Business relayed insurance premiums but not including premiums for this policy.Taxes, other than in respect of related costs for non income generating employees as above.
Salaries and other related costs (e.g. payroll tax, superannuation contributions, FBT) for non-income generating employees of your business.Any payment which we determine on a fair and reasonable basis not to be regular operating expense.
Net costs associated with employing a locum

Please note this table is not an exhaustive list and life insurance companies will differ on what expenses they do and do not cover.

When will my cover end?

Your cover will generally end at the earliest of:

  • Policy anniversary when the life insured is aged 65.
  • Policy expiry.
  • Date the insurer receives written confirmation from the insured notifying them of cancellation.
  • Date of the life insured’s death.

Further to this, you will not be paid a benefit if you have ceased to own or operate a business at the time of illness or injury, even if the policy is still in force.

If you own your own business or would like further information about the Business Expenses policy option, please contact us on 1300 135 205.

Published: November 20, 2015

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