Protect the business you have built with advice on buy sell insurance, business expense cover and other business protection strategies designed around your ownership, operating costs and key people.
For a business owner, personal and business financial risks are often closely connected.
Illness, injury, permanent disability or death can affect more than personal income. It can also affect the ability of the business to meet ongoing expenses, retain staff, fund the transfer of an ownership interest or continue operating while the owners determine what happens next.
We start by understanding the business, its ownership structure, key people, ongoing financial commitments and the consequences if an owner or key person is no longer able to work in or remain part of the business.
From there, we can advise on the types and amounts of insurance that may be appropriate, how the cover should be owned and how different policies may work together.
Depending on the business, this can include buy sell insurance, business expense insurance and key person insurance, together with the personal insurance needs of the owners.
Where legal agreements, business valuations, accounting or specialist tax services are required, we can work with the client’s lawyer, accountant and other professional advisers. Private Capital Management can provide tax financial advice within the scope of our advice.
Buy sell insurance can help fund the transfer of a business owner's interest where an agreed insured event occurs, such as death or total and permanent disability, subject to the policy and the associated legal agreement. The objective is to provide funding so ownership can be transferred without relying solely on the remaining owners, the departing owner's family or the business to fund the transaction.
Business expense insurance can reimburse eligible fixed business costs while an insured owner or other eligible person is unable to work because of illness or injury, subject to the policy terms. This can include specified expenses such as premises costs, utilities, eligible wages and equipment or vehicle leases.
A business can be financially affected if an owner or another key person dies, becomes permanently disabled or suffers another insured event. Key person insurance may provide funding to help the business manage the financial impact, subject to the policy structure and terms.
Business protection should also consider the personal financial position of the owners. Life insurance, TPD, trauma and income protection can address different personal risks and may need to be considered alongside business insurance.
For businesses with more than one owner, an unexpected death or permanent disability can create both a personal and a commercial problem.
The departing owner's family may need to realise the value of the ownership interest, while the remaining owners may want certainty about who will own and control the business.
A properly considered buy sell arrangement can combine an appropriate legal agreement with insurance funding. Where an insured event occurs and the relevant policy and agreement conditions are satisfied, the insurance proceeds can help provide the funding required for the ownership interest to be transferred.
Our role is to advise on the insurance component, including the amount of cover, ownership structure, insurer and policy terms. The buy sell agreement itself should be prepared by an appropriately qualified lawyer, and business valuation and tax matters may require input from the client's accountant or other professional advisers.
We can work with those advisers so the insurance and the broader succession arrangement are considered together.
A business can continue to incur expenses even when an owner is unable to work because of illness or injury.
Business expense insurance is designed for eligible business owners and can reimburse specified fixed operating costs during an eligible claim period, subject to the policy terms.
Depending on the policy, eligible expenses may include premises costs, utilities, certain employee costs, equipment or vehicle leases and other specified expenses required to keep the business operating.
The amount of cover is generally considered against eligible business expenses rather than personal income. We review the business cost base and relevant policy terms before recommending an amount of cover.
Business expense insurance serves a different purpose from income protection. Income protection is designed to replace part of an individual's income, while business expense insurance is designed to help meet eligible business operating costs.
Some businesses depend heavily on an owner, executive or other key person for revenue, client relationships, technical expertise, management or access to finance.
If that person dies, becomes permanently disabled or experiences another insured event, the financial impact on the business can extend beyond the loss of their salary.
Where appropriate, key person insurance may provide funding to help the business manage the financial consequences, subject to the policy structure and terms.
The amount and ownership of cover should reflect the financial risk being protected. Tax treatment can also depend on the purpose and structure of the policy. Private Capital Management can provide tax financial advice within the scope of our advice and can coordinate with the client's accountant or tax agent where specialist tax services are required.
Business insurance often sits alongside legal, accounting and tax considerations.
For buy sell arrangements, the insurance funding should align with the legal agreement governing how an ownership interest is transferred. Business valuations may also need to be agreed or periodically reviewed.
We can work with your lawyer and accountant as part of the process so the insurance recommendation is considered alongside the broader business structure.
Private Capital Management provides financial advice and can provide tax financial advice within the scope of our advice. Legal documents, business valuations, accounting services and tax return services should be completed by the appropriately qualified professional.
Before recommending new business insurance, we review relevant existing cover held by the business or its owners.
This can include the amount insured, policy ownership, premiums, definitions and the purpose for which the existing cover was established.
Existing insurance should not be cancelled simply because a new policy is available. Where replacement is recommended, the differences between the existing and proposed cover, including underwriting and policy terms, should be understood before an existing policy is cancelled.
For eligible doctors, lawyers and select professionals, we can also consider insurance arrangements available through a mutual structure.
Through relationships with participating insurers, eligible clients may be able to access insurance through a mutual that can provide a share of profits back to eligible members, subject to the mutual's terms, insurer arrangements and eligibility requirements.
Our advice remains focused on whether the insurance itself is appropriate for the business owner and the risks being protected. Any potential profit share is an additional feature and should not be the primary reason for selecting a policy.
Eligibility, participation and any profit share are not guaranteed and can vary according to the applicable mutual, insurer and arrangement.
Business insurance needs can change as the value of the business, ownership, debt, operating costs and key people change.
We can review the cover periodically to consider whether the amount insured, ownership, policy structure and purpose of the cover remain appropriate.
For buy sell arrangements, this may include considering whether the insurance funding remains aligned with the current business value and ownership interests, while the associated legal agreement should be reviewed with the client's lawyer.
If a claim needs to be made, we can also assist with the claims process, including helping you understand the policy requirements and communicating with the insurer as the claim progresses.
Buy sell insurance is insurance used to help fund the transfer of a business owner's interest following an agreed insured event, such as death or total and permanent disability, subject to the policy and associated legal agreement. The insurance is the funding mechanism; the legal agreement governing the ownership transfer should be prepared by an appropriately qualified lawyer.
Where there is more than one owner, an unexpected death or permanent disability can create uncertainty about ownership and how the departing owner's interest will be funded. Buy sell insurance can provide funding to support an agreed ownership transfer, reducing the need for the remaining owners, the business or the departing owner's family to fund the transaction from other resources.
Business expense insurance can reimburse specified fixed operating costs while an eligible insured person is unable to work because of illness or injury, subject to the policy terms. It is designed to help meet eligible business costs rather than replace the owner's personal income.
Income protection is designed to replace part of an individual's income where illness or injury prevents them from working. Business expense insurance is designed to reimburse eligible fixed business costs during an eligible claim period. Depending on the business owner's circumstances, both types of cover may be relevant.
Key person insurance is cover established to help protect a business against the financial impact of losing an owner, executive or other person who is important to the business, subject to the policy structure and insured event.
The amount depends on the risk being protected. Business expense cover is generally considered against eligible ongoing expenses, while buy sell cover may be considered against the value of an ownership interest and key person cover against the financial impact of losing that person. We assess each purpose separately rather than applying a standard amount.
Yes. Business insurance can involve legal agreements, valuations, accounting and tax considerations. We can work with your existing lawyer and accountant so the insurance recommendation is coordinated with the broader business arrangement.
Yes. We can assist with the claims process, including helping you understand the policy requirements and communicating with the insurer as the claim progresses.
Private Capital Management is based at Level 26, 1 Bligh Street in the Sydney CBD. We meet with business owners in person in Sydney and by video across Australia.
Meetings, document collection and insurance applications can generally be completed digitally, allowing us to provide advice and manage the underwriting process regardless of location.
Where a business insurance strategy involves a lawyer, accountant or other professional adviser, we can also coordinate with those advisers as part of the advice process.
Licensed and Accredited
AFSL 342880
Authorised Representative 1239545
ASIC
Qualified Tax Relevant Provider, Nathan Ide
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