Insurance Essentials for SME's

Understanding the Risk Landscape for Australian SMEs

Operating a small or medium-sized enterprise involves managing far more than daily operations. Business owners must also address a broad spectrum of risks, ranging from property damage and legal claims to prolonged interruptions and the increasing threat of cyber incidents.

Despite this complexity, many SME owners believe that a single, generic insurance policy is sufficient. In reality, achieving true protection requires a combination of carefully selected policies that respond to the full scope of a business’s activities, assets and liabilities.

At Sage Insurance, we partner with business owners to understand the specific risks they face. Our tailored approach ensures your coverage is not only compliant but also aligned with the true nature of your business exposures.

The Core Policies Every Business Should Consider

While no two businesses are alike, there are foundational policies that most SMEs should have in place. These include:

Public and Products Liability Insurance: Covers third-party claims for personal injury or property damage arising from your business activities or products. Whether it’s a customer injury on your premises, a supplier incident at a delivery point or product malfunction in the hands of a consumer, liability claims can be costly and disruptive.

Property Insurance: Protects physical assets such as buildings, contents, stock, fit-outs, tools and equipment. It responds to insured events such as fire, theft, vandalism and weather-related damage. Importantly, policies should reflect the true replacement value of assets to avoid underinsurance. This cover is especially critical for retail, manufacturing, hospitality and any business with a physical location or inventory

Cyber Insurance: Small and medium-sized businesses are increasingly being targeted by cyber criminals because they often have fewer resources dedicated to digital security. Cyber Insurance helps cover the costs associated with a cyber breach, including data restoration, incident response, legal costs, notification requirements and business interruption. Having this protection gives businesses a 24/7 hour hotline with assistance at any moment - especially when you need it most, ensuring your business can recover quickly and maintain trust.

Business Interruption Insurance: Replaces lost income and operating expenses when your business is forced to shut down or scale back due to an insured event, such as a fire, flood or equipment failure. While property insurance addresses physical damage, Business Interruption Insurance ensures your revenue continues during the recovery period.  Accurate calculation of indemnity periods is critical.

Professional Indemnity Insurance: Essential for service-based businesses, this protects against claims arising from errors, omissions or negligence in the delivery of professional advice or services. Legal costs alone can be significant, even in cases where no wrongdoing occurred. This coverage is critical for consultants, engineers, designers, brokers and other professional advisors.

Workers’ Compensation Insurance: A statutory requirement that provides coverage for work-related injuries and illnesses affecting employees. It includes medical expenses, rehabilitation and loss of earnings. Beyond being a legal requirement, it is a critical element in supporting staff wellbeing and maintaining business reputation. For SMEs with employees, even casual or part-time, this policy ensures compliance and provides a vital safety net for the workforce

Underinsurance in the SME Sector

Despite access to comprehensive insurance products, underinsurance remains a persistent and often misunderstood risk. According to the 2025 Vero SME Insurance Index, many Australian businesses are underinsured by an average of $340,000. Supporting this, research from Howden Group notes that approximately 70% of businesses are underinsured, with an average shortfall of 30% across property and assets.

Underinsurance may occur for various reasons, including:

• Outdated valuations for property or equipment

• Incorrect assumptions around business interruption periods

• Overlooking emerging exposures such as cybercrime

• Selecting coverage based solely on cost rather than risk

• Failing to review and update policies after key business changes

These gaps typically remain unnoticed until a claim is lodged, when it is too late to rectify the oversight.

Consequences of Inadequate Coverage

Underinsurance can lead to major financial and operational setbacks. Businesses may face out-of-pocket losses, extended downtime without compensation, unfulfilled client obligations or reputational damage. In many cases, these shortfalls occur because coverage limits, indemnity periods or policy scopes were not accurately aligned with the business's actual risk profile. Without the right protection in place, recovery becomes significantly more difficult.

How Sage Insurance Supports SME Resilience

At Sage Insurance, we take a consultative approach to protecting your business. We begin by understanding your operating model, risk tolerance and current policy structure. From there, we provide a health check of your insurance coverage, offering strategic advice on coverage enhancements, accurate asset valuations and appropriate limits to reflect your current exposure.

Our services include:

• Health checks on SME insurances to make sure they are fit for purpose

• Risk-specific policy reviews tailored to your industry and business model

• Access to specialist cover that is not always offered through direct channels

• Advice on realistic indemnity periods for business interruption scenarios

• Guidance on emerging risks, including cyber, environmental and regulatory exposures

• Dedicated claims advocacy to ensure timely and fair resolution

Our goal is to help you build not just compliance, but confidence. With the right protections in place, your business is better positioned to survive and recover from the unexpected.

Is Your Insurance Keeping Up With Your Business?

If you have not reviewed your insurance in the past year or if your operations, staffing or revenue have changed, it is worth reassessing your policies. Sage Insurance can provide you with a health check of your existing policies and advise you on what you may be missing. Underinsurance is not always obvious until the moment a claim is tested. By then, the consequences can be significant.

Contact Us

Email: hello@sageins.com.au

Phone: (03) 9969 2067

Address: Suite 14/18-34 Station Street, Sandringham VIC 3191