Business Insurance Review Checklist: Buying a Business in Australia

The Complete Business Insurance Review Checklist

Phase 1: Seller Disclosure — What to Request

Include these items in your formal due diligence request. Request them early — insurance documents can take time to locate, and delays here can push out your timeline.

Policy schedules and certificates of currency

• Request current policy schedules for all insurance policies held by the business
• Request certificates of currency for each active policy confirming cover is in place
• Confirm policy start and expiry dates — flag any policies expiring within 90 days of settlement
• Confirm the policyholder name — is it the individual owner, the company, or a trust?
• Request a list of all policies held in the past three years (catches lapsed or discontinued cover)

Claims history

• Request a full claims history for the past three years across all policies
• Confirm whether any claims are currently outstanding (lodged but not yet settled)
• Confirm whether any policies have been declined for renewal by an insurer
• Confirm whether any policies have been cancelled by the insurer (not by the policyholder)
• Ask whether the insurer has ever applied a premium loading or exclusion due to claims

Contract insurance requirements

• Request copies of all customer contracts and check what insurance levels are specified
• Confirm whether any contracts require the business to maintain minimum liability cover
• Check whether any contracts require the business to be named on the client's insurance policy
• Confirm whether subcontractors are required to carry their own insurance under existing agreements

Vehicles and equipment

• Request a complete list of business vehicles (make, model, registration)
• Confirm which vehicles are covered by the business's motor insurance
• Request the tools and equipment register and confirm what is covered under portable tools insurance
• Flag any high-value items (over $10,000) and check the sum insured covers replacement cost

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Phase 2: Review and Verification

Once you have the documents, work through these checks. Flag anything that looks wrong or incomplete.

Public liability insurance

• Confirm the policy limit — most commercial contracts require at least $10 million; some require $20 million
• Check whether the policy is "occurrence" or "claims made" — occurrence is generally better for ongoing risk
• Confirm the policy covers all the business's activities — check that the description of activities isn't too narrow
• Note whether the policy has any industry-specific exclusions (e.g., certain types of work, certain heights)
• Flag if the limit is $5 million or below — this may not meet client contract requirements

Workers compensation (WorkCover)

• Confirm all employees are covered by a current workers compensation policy
• Identify the state the policy is issued in — workers comp is state-based in Australia
• Check whether the business has operations or employees across multiple states (may require separate policies)
• Obtain the current premium rate and calculate expected premium based on the employee wage bill
• Contact your state's workers compensation authority to get an independent quote using the business's activities and wage bill — compare to what the seller pays to identify any classification discrepancy
• Review the claims history from Phase 1 — three or more workplace injury claims in three years is a flag worth understanding
• For share sales: confirm whether there are any outstanding workers compensation claims that will be inherited

Commercial vehicle insurance

• Confirm whether vehicles are covered comprehensively or third-party only
• Check whether all business vehicles are listed on the policy (vehicles not listed are not covered)
• Flag any vehicles with outstanding at-fault claims (these affect renewal terms)
• Confirm whether the policy covers employees driving business vehicles
• Confirm whether the policy covers hired or borrowed vehicles

Tools and equipment (portable tools insurance)

• Check the sum insured against the tools and equipment register — are high-value items covered?
• Confirm per-item limits — many policies have per-item caps that may be below the replacement cost of specialised equipment
• Confirm whether the policy covers tools and equipment while in a vehicle or only on-site
• Flag any items over the per-item limit and confirm whether they can be scheduled separately

Professional indemnity (if applicable)

• Confirm whether the business provides any advice, certification, or design services that require PI cover
• For building inspectors, engineers, or certifiers: confirm the policy limit is adequate and covers all services offered
• Check whether PI cover is "claims made" and whether run-off cover is included for claims relating to work done before settlement

Business interruption (if held)

• Note the sum insured and the indemnity period (how many months of lost income it covers)
• Assess whether this level of cover is appropriate to continue

Gap analysis

• List any periods in the past three years where the business did not have continuous public liability insurance — this is a serious flag
• List any periods where workers compensation lapsed — flag immediately and get legal advice
• Note any policies the seller held that you will need to arrange independently for the new entity

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Phase 3: Pre-Settlement — Arranging Your Own Cover

Start this phase at least four to six weeks before your target settlement date. Insurance brokers need time, and you don't want to be sorting this in the final days.

Engage an insurance broker

• Identify a broker who works with small businesses (not a comparison website — an actual broker)
• Provide the broker with a full business description: industry, primary activities, revenue, number of employees, vehicles, equipment
• Request quotes for: public liability, workers compensation, commercial vehicles, tools and equipment, business interruption
• For trades businesses: ask the broker to check for any licence-linked insurance requirements in your state

Public liability

• Confirm the required liability limit by reviewing the highest level specified in any customer contract
• Get quotes from at least two insurers
• Confirm the policy will commence on settlement day
• Ensure the policy description of activities matches what the business actually does

Workers compensation

• Register as a new employer with your state's workers compensation authority after settlement (or immediately before, depending on the state)
• Confirm whether you can pre-arrange a workers compensation policy to commence on settlement day
• Note: in most states, workers compensation registration and the first premium are due within a specified period of becoming an employer — check the requirements for your state
• Confirm whether existing employees transfer and whether their hours and roles are documented for the wage declaration

Vehicles

• Arrange comprehensive motor insurance for all business vehicles under the new ownership
• Confirm the policy starts on settlement day
• Note any vehicles being excluded from the purchase — confirm these are removed from the policy

Tools and equipment

• Arrange portable tools insurance based on the equipment register from Phase 1
• Schedule any high-value items explicitly on the policy

Certificates of currency

• Confirm with your broker when certificates of currency will be issued
• Ensure you have certificates ready for any customer contracts that require them

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Phase 4: Settlement Day and Handover

On settlement day

• Confirm all new policies are active as of settlement date — obtain written confirmation from your broker
• Obtain certificates of currency for each policy and file them
• Confirm that any vehicles or equipment being transferred are covered under your new policies from the moment of settlement
• For share sales: confirm that the company's existing policies remain in force and that you have notified the insurer of the change of control as required

Within the first week

• Send certificates of currency to any commercial customers or clients who require them
• Check whether any customer contracts require a formal notification of the change in business ownership
• If employees are being retained under Fair Work Act obligations, confirm that your workers compensation policy covers them from day one
• Review any licence-linked insurance obligations with your insurance broker — trades licences often have specific requirements

Within the first 30 days

• Conduct an equipment audit and update the tools and equipment schedule with your insurer if any items were missed during due diligence
• Review the business's previous claims history one final time and confirm no claims have been lodged in the period between your due diligence review and settlement
• Check with your broker whether the business's claims history (where inherited in a share sale) affects your renewal terms, and if so, plan accordingly
• Set renewal reminders for all policies — add to your calendar at the 60-day mark before each expiry

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Quick Reference: State Workers Compensation Authorities

Each Australian state has its own workers compensation scheme. The relevant authority for registering as a new employer:

• New South Wales: iCare (icare.nsw.gov.au)
• Victoria: WorkSafe Victoria (worksafe.vic.gov.au)
• Queensland: WorkCover Queensland (worksafe.qld.gov.au)
• Western Australia: WorkCover WA (workcover.wa.gov.au)
• South Australia: ReturnToWorkSA (rtwsa.com)
• Tasmania: WorkSafe Tasmania (worksafe.tas.gov.au)
• ACT: WorkSafe ACT (worksafe.act.gov.au)
• Northern Territory: NT WorkSafe (worksafe.nt.gov.au)

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Common Insurance Red Flags — Quick Reference

Flag any of these during Phase 2 and raise with your solicitor or broker before proceeding to settlement:

• Any period in the past three years without continuous public liability insurance
• Workers compensation policy that has lapsed or been cancelled
• Outstanding workers compensation claims (especially for share sales where you inherit the company)
• An insurer has declined to renew any policy
• A premium loading applied due to claims — may signal ongoing risk
• Public liability limit below what major customer contracts specify
• Vehicles not listed on the motor insurance policy
• High-value tools or equipment with no specific insurance cover
• Professional indemnity missing for a business that certifies, inspects, or advises

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For a broader overview of the due diligence process, the full due diligence checklist and the operational due diligence checklist cover the complete picture. The employee entitlements due diligence guide covers the workers compensation and superannuation obligations for retained staff in more detail.

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