How to insure your micro business

By AAMI 29 November 2023

Have you turned a brilliant idea into a successful small business? Or ‘micro business’, as insurance types like to call it?

You may be thinking ‘hmmm, that’s not me. I just sell some handmade items from my social media accounts or market stall. It’s not a businessey business.’

Except it is a real business, you’re earning real money and there’s real risk involved.

You may have forgotten a big part of selling products to people – liability insurance. What if someone has a reaction to a soap you made or a candle you sold bursts into flames causing property damage?

Here’s how liability insurance may help protect you and your blossoming micro business.

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Understanding liability exposures

As a micro business owner, it's important to know how your creations could expose you to potential liabilities. Even if your products are meticulously crafted, accidents can happen.

What if a customer has an adverse reaction to one of your products or claim it damaged their property? Without liability insurance, you could face major financial and legal repercussions so you may wish to think about how you can protect yourself and your business.

Products Liability Insurance

What is Products Liability cover? Products liability cover could help cover the liability of a person to pay compensation for injury, or for property damage, to another person/their property in connection with their micro business. The AAMI Public Liability Insurance page tells us:

‘Products Liability insurance is designed for businesses who are involved in the production, supply or sale of products to members of the public. It helps protect against claims of personal injury or property damage that a third party suffers (or claims to have suffered) as a result of your business's product.’

Let’s say a customer claims your handmade soap or face scrub caused an allergic reaction. Your business insurance policy may cover legal costs and the customer’s medical expenses – which can quickly add up – meaning this insurance may help protect not only your business, but your personal assets as well. Consider the terms, conditions and exclusions of your policy.

Home based business insurance

Many people run their micro business from home without realising their existing home and contents insurance policy may not cover their business activities. Have you heard about AAMI Business at Home Insurance? Created for people running a business from home, you can combine your Home and Contents Insurance with your Business Insurance to create one streamlined policy.

Custom cover for your micro business

Every micro business is different, so your insurance needs will be different. That’s why you may wish to speak to a business insurance specialist to help you customise policies to suit your needs.

What’s the difference between a small business and a micro business anyway?

Great question!

The Australian Bureau of Statistics (ABS) defines a small business as having less than 20 employees while a micro business is operated by 0-4 staff.

In fact, an Australian Banking Association report found that, as of June 2022, micro businesses were the largest proportion of Australian business. And of these, roughly 1.55 million – that’s 60 percent – employed no people at all.

Aussies have always been an innovative bunch, so it’s no surprise micro businesses are on the rise. This also means a potential increase in liability as more people buy their products.

You may wish to consider what insurance your thriving micro business might need. Follow the links to learn more or call us to chat with a business insurance specialist.

Learn more about Public Liability Insurance

Insurance is issued by AAI Limited ABN 48 005 297 807 AFSL 230859 (AAI) trading as AAMI. Read the relevant Product Disclosure Statement before buying this insurance. The Target Market Determination is also available.

This advice has been prepared without taking into account your particular objectives, financial situations or needs, so you should consider whether it is appropriate for you before acting on it.