Businesses Can Be Caught Out

While business booms in WA thanks to the resources sector, many companies signing new contracts may face serious problems if their insurance isn’t adequate.

“Many businesses aren’t aware if their existing insurance covers the signed contract conditions,” said Mr Newbound.

“Winning a contract is just the start of it,” he said.

“Big businesses have teams of people working on contracts.”

“But small to medium sized businesses can often be caught out.”

“Before submitting terms, an insurance broker should be called in.”

Mr Newbound said some of the main issues include:

• The limits of indemnities often need to be increased, but the Insurers of your insurance Policies need to be informed. You may have a 10 million dollar liability and the contract requires 20 million.

• Not reading the insurance clauses. Contracts need to be read from start to finish. In some instances insurance can also be included in the Indemnity Clauses, or other areas.

• Being jointly insured. Not favoured.

Contracts in some cases are bordering on being against the Trade Practices Act or Civil Liability Act.

“You may have won the contact but what if your insurer won’t protect you?”

“Contract” law is one thing, but “insurance” law is another.

Mr Newbound runs WA Insurance Brokers which specialises in Business Insurances