5 COMMON MISCONCEPTIONS ABOUT INSURANCE AND BUSINESS EXPOSURES
Workers Comp Insurance will cover me for a SafeWork investigation
Workers Comp insurance will cover you for injuries to your employees. It will cover medical expenses, loss of wages and (if unable to return to work) redeployment costs. If, however SafeWork investigate your business due to a workplace incident or accident, or a Safety Complaint made by an employee or third party, you may incur legal representation and defense costs and may even be prosecuted or fined. These expenses can be crippling to a business and are insurable under Management Liability insurance.
Long time employees can be trusted and rarely engage in fraud
In most circumstances internal fraud is committed with those given the freedom and authority to do so. I.e. Long-term employees whom are trusted. 60 percent of frauds committed against commercial businesses were perpetrated by ‘insiders’. They generally have tenure in excess of 5 years. Best practice fraud controls go a long way in reducing the likelihood of experiencing a loss, however cannot always prevent it. For this reason, crime or fidelity insurance exists to bridge the gap between what you can control and what you can’t.
Employment obligations start the day that I hire someone
Not necessarily. Equal employment opportunity obligations commence when someone applies to be hired by you. If a person believes they were discriminated against as part of the hiring process they may make a complaint to the Australian Human Rights Commission which could give rise to legal action against your business.
There needs to be a Safety incident for regulators to investigate or audit my business
SafeWork and SIRA can come into your business and review the adequacy of your insurance policies and your safety systems. Random SIRA audits or reviews can happen to anyone in the same way as a tax audit and can result in fines and penalties. Sometimes businesses mistakenly supply incorrect information because they misunderstand the factors used to calculate a workers compensation policy in relation to the make-up of their business. In other cases employers or their broker forget to update a policy when business changes occur. Whether it is intentional or an oversight, you can still be penalised.
SafeWork can also investigate your business in the absence of a notifiable incident. This will usually occur as a result of a safety complaint (raising a health and safety issue) or alternatively during a compliance campaign.
If I don’t know what I am allowed to do, I’m better doing nothing at all
Omissions are considered to be as serious as errors when it comes to the law. If you are not sure of any of your obligations, the best thing you can do is seek advice from your lawyer, accountant or insurance broker. Doing nothing, under most legislation, is tantamount to a breach.
