Business Contents Insurance in Australia Explained

Business contents insurance is designed to cover the equipment, furniture, fit-out and stock your business owns against insured damage or theft at your premises. Think of a storm soaking your stock or a break-in that clears out your laptops and tools.

In Australia, contents cover is commonly arranged as one section of business pack insurance, alongside sections such as glass, theft and business interruption.

Cover depends on the policy and insurer you choose. Check the policy wording and its terms and conditions for what is and isn't included.

What does business contents insurance cover?

A contents section is designed to cover the physical items your business uses to trade, subject to the policy terms, conditions and exclusions. It commonly responds to damage from insured events such as fire, storm, lightning, explosion, impact and some types of water damage.

Depending on the policy, cover may include:

• Equipment: computers, printers, phones, tools and machines kept at the premises
• Furniture and fittings: desks, chairs, shelving, display units and counters
• Tenant fit-out: improvements you paid for in a leased space, such as partitions, lighting, flooring or a kitchen
• Stock: goods for sale, raw materials and finished products, often listed as a separate item with its own sum insured

How do business contents, stock and building cover differ?

Contents are the items you use to run the business, stock is what you sell or make, and the building is the structure itself. Insurers commonly list each one as a separate item on the policy schedule, each with its own sum insured.

If you own your premises, you can consider building and contents insurance for the property and everything you keep in it. If you lease, the landlord commonly insures the building and your lease sets out what you insure. Commercial leases often make tenants responsible for their own fit-out and shopfront glass.

Fit-out commonly sits in the grey zone, because some leases treat fixtures you installed as part of the building. Where the lease is unclear, an upcover representative or a broker can talk through how the policy schedule could reflect it. The shop insurance guide covers leases, glass and stock for retailers.

What does a business pack include besides contents?

A business pack bundles several covers into one policy. Commonly includes property (building, contents, stock), business interruption, glass, theft, money and public and products liability. Options may include machinery breakdown, electronic equipment, portable equipment, goods in transit, tax audit and employee dishonesty. A common starting point for small businesses with premises.

Standard sections

• Glass: designed to cover accidental breakage of fixed glass such as windows, doors and display cases
• Theft: designed to cover business property stolen from your premises, commonly only where there are signs of forced or violent entry (theft from locked building)
• Money: designed to cover cash lost or stolen at the premises or on the way to the bank, up to a stated amount
• Business interruption: designed to help cover lost income or ongoing costs, such as rent, when an insured event such as fire or storm damage stops you trading
• Public and products liability: designed to cover claims if someone is injured or their property is damaged in connection with your business. Products liability is designed to cover claims for injury or damage caused by a product you sold or supplied, once it has left your hands

Optional sections

• Machinery breakdown: designed to cover sudden mechanical or electrical breakdown of machinery such as cool rooms or compressors
• Electronic equipment: designed to cover breakdown of computers and other electronic equipment
• Portable equipment: designed to cover equipment you take away from your premises
• Goods in transit: designed to cover your goods while they move by road, rail, sea or air
• Tax audit: designed to help cover professional fees when a tax authority audits your business
• Employee dishonesty: designed to cover losses from theft or fraud by your employees

Each section is subject to the policy terms, conditions and exclusions. The guide to what business pack insurance covers explains each one in more detail.

How do you set the sum insured for business contents?

The sum insured is the most the insurer may pay for an item such as contents or stock, subject to the policy terms (sum insured). You choose the figure when you arrange cover, and it usually affects the cost.

Business Queensland notes that property policies "may have an upper limit on the amount payable". It also advises owners to know the current costs of your property "so that you're insured for an appropriate amount".

Many businesses build the figure from a list of their equipment, furniture, fit-out and stock, valued at today's replacement cost. Stock often moves through the year, so some businesses set the stock figure for their busiest period rather than a quiet month.

Replacement value or indemnity value: what is the difference?

Replacement value is what it costs to replace an item with a new equivalent today. Indemnity value is what the item was worth just before the loss, which usually takes its age and wear into account (replacement costs).

Business Queensland describes general property insurance as a policy that "aims to replace or restore property as new". An indemnity basis may pay less for older equipment, because the payment reflects the item's value at the time of the loss.

Whether a policy pays on a replacement or indemnity basis varies between policy wordings, so always check with your broker or the team at upcover. Some policies use different bases for different items, and stock is commonly valued at what it costs you to buy or make.

What happens if business contents are underinsured?

Underinsurance means the sum insured is lower than the real value of what you own. Moneysmart puts it plainly: "Underinsurance means your insurance won't cover the full cost to rebuild, repair or replace what you've lost" (underinsurance explained).

The first effect is that a large loss may exceed the sum insured. The second is the average clause, a condition in some business policies that may reduce a claim in proportion to the shortfall. For example, if contents are insured for half their value, a policy with an average clause may pay about half of a partial loss.

Whether an average clause applies, and how it is worked out, varies between policy wordings. Reviewing the sum insured at renewal, or after a new fit-out or large stock purchase, helps keep it close to the real value (underinsurance).

Is business equipment covered away from your premises?

Contents cover usually applies at the address shown on your policy schedule. Equipment you take to a client's site, a market or a job may need a separate portable equipment section.

Portable equipment is designed to cover equipment you take away from your premises, such as tools or machines used at a client's location, against insured loss or damage. Where the equipment is covered, and the limits, vary between policies.

Does home and contents insurance cover a home-based business?

A home and contents policy may not extend to business use. Business Queensland states that "your general home and contents insurance may not cover your business operations".

The same page notes that a home policy may still apply in some cases. One example is a business that uses less than 20% of the home, with no customers or suppliers visiting. Business stock, specialist equipment and visiting clients are the areas where a home policy may stop.

What does business contents insurance not cover?

Contents policies set out exclusions and conditions. Exclusions commonly include, but are not limited to:

• Wear and tear: gradual deterioration, rust, mould or pests (wear and tear exclusion)
• Theft without forced entry: theft through an unlocked door and unexplained stock shortages are commonly excluded
• Mechanical or electrical breakdown: generally sits with an optional machinery breakdown or electronic equipment section
• Flood: some policies exclude flood or offer it as an option, which matters by location
• Loss of electronic data: generally sits with cyber insurance, which is designed to cover costs after a data breach or cyber attack
• Deliberate damage by you: intentional acts by the insured are excluded
• Unoccupied premises: conditions may limit cover if the premises are left empty beyond a stated period

Important: This list is not exhaustive. Exclusions vary between insurers. Always refer to the policy wording and its terms and conditions for the exclusions that apply to you.

What do business contents claims look like?

Contents claims are made on your own policy for damage to, or theft of, your property.

Hypothetical example: storm damage to stock

A wild storm lifts roof sheets overnight. Rain pours into your premises and soaks stock, shelving and your EFTPOS terminal. You close for two days while repairs happen, then reorder essentials and replace damaged equipment to reopen.

How cover may respond: Property and contents insurance may help repair or replace insured stock and equipment damaged by storm or rainwater, up to your limit.

Hypothetical example: break-in theft overnight

You open up and find the back door forced. Laptops, tools and high value stock are gone and the lock and frame are smashed. You pay a locksmith, replace key items and hire temporary security while you reset the shop.

How cover may respond: Theft insurance may respond when contents or stock are stolen after forcible entry and may cover break-in damage, where insured.

Important: Claims scenarios are hypothetical examples only. Cover is always subject to policy terms, conditions and exclusions. Policy wordings may also vary between insurers. Always refer to the policy wording and its terms and conditions for details.

Telling your insurer and starting a claim

If you're concerned about a particular loss or damage at your premises, you can always consider telling your insurer as soon as you become aware of an incident, complaint or circumstance that could lead to a claim. You don't need to wait for a formal demand. Also keep in mind that notifying of a claim late may affect your claim.

You can start a claim through the make a claim page. Admitting liability, incurring costs or agreeing to a settlement before you notify your insurer may affect your claim. Starting a claim does not confirm that your claim is covered; your insurer assesses it under the policy terms, conditions, exclusions and limits.

How much does business contents insurance cost?

The cost of contents cover depends on factors such as your sums insured, location, building type, security and claims history. The excess you choose, which is the amount you pay towards each claim, and the other sections you add also play a part.

Contents are commonly priced as part of a business pack, and upcover's business pack insurance cost guide reports figures for whole packs. Most businesses pay from around $665 to $2,112 a year for a business pack, with a typical cost of around $1,267. Those figures come from over 380 business pack policies arranged through upcover, not the contents section alone.

How upcover can help

upcover arranges business pack insurance, including contents and stock cover, for Australian small businesses. upcover works with 80+ insurance partners and can arrange quotes from a range of insurers.

• 70,000+ businesses covered
• 4.9/5 customer rating
• Certificate of currency available once your policy is confirmed

To start, have your ABN, premises address, lease insurance clause and a list of contents and stock values ready. Get a business pack insurance quote through upcover.

Frequently asked questions

Is business contents insurance compulsory in Australia?

Business contents insurance is not a general legal requirement in Australia. A commercial lease, a lender or a contract may set its own insurance conditions.

Does business contents insurance cover stock?

Stock is commonly insured as a separate item within the property section of a business pack, with its own sum insured. Cover is designed to respond to insured events such as fire, storm or a break-in with forced entry, subject to the policy terms.

Who insures the building if I lease my premises?

The landlord commonly insures the building, and the lease sets out what the tenant insures. Tenants are often responsible for their own contents, stock, fit-out and glass, though leases differ.

Does my home and contents insurance cover my home business?

Home and contents insurance may not respond to business equipment, stock or visiting clients. A home policy may still apply in some limited cases, so it helps to check whether the insurer needs to know about business use.

What is an average clause in business insurance?

An average clause is a condition in some business policies that may reduce a claim when the sum insured is too low. The reduction is commonly in proportion to the shortfall, and how it applies varies between policy wordings.

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_{The information in this article is general information only and does not take into account your objectives, financial situation or needs. Lease terms, policy sections, sums insured, valuation bases and exclusions vary between landlords, insurers and policies, and can change. Before deciding whether a product is right for you, read the policy wording and its terms and conditions. upcover arranges insurance products with selected insurers and underwriters and does not compare all general insurers or insurance products available in the market.}