When you consider the protection that the insurance policies provide to your business and financial well being, insurance really isn’t expensive at all. Add to that the fact that premiums are generally tax deductible for businesses. People just don’t like paying for something they are not likely to use.
However if you do need to claim, insurance cover can become your best friend, particularly if it has been properly arranged by a professional insurance broker - whom will risk profile exactly what cover you need so that you do not have any surprises if you come to claim something that is not covered.
Commercial insurance in Australia, particularly in NSW and Victoria is the most highly taxed in the world. Clients may find they're paying a tax rate over 100% of the actual insurance company premiums. An example below might leave some clients shocked at these hidden taxes, based on a commercial property insurance policy in country Victoria:
Insurance Premium = $500
+ Terrorism Levy 4% = $20
+ Fire Brigade Levy 63% of the cumulative total = $327.60 (yes that is a levy on a levy)
+ GST 10% of the cumulative total = $84.76 (yes that is now a tax on a levy on a levy)
+ Stamp Duty 10% of the cumulative total = $93.24 (yes that is now a tax on a tax on a levy on levy)
Final amount the policy holder pays?
In essence for every $1 that the insurance company charges the client, they pay $1.03 in taxes bringing the cost up to $2.03 for $1 worth of cover.
This is one of many reasons insurance is expensive, but regardless of expensive the real question is, is the risk greater than the cost?