Who qualifies as a 'key person' in a business?

A key person is someone whose knowledge, skills, experience, and leadership are crucial to your business's success and whose loss would result in significant financial impact. According to the ATO, a key person is one whose loss would result in significant loss of profits during the continuation of business operations. This typically includes business owners and founders, company directors, partners in a partnership, key salespeople who generate substantial revenue, project managers with critical client relationships, or employees with specialised technical skills that are difficult to replace. The person must be directly associated with the business - you cannot insure important clients or suppliers. Most insurers require that the key person contributes to a certain percentage of profits or holds share ownership in the company. The qualification criteria focus on the financial impact their absence would create, including their contribution to revenue, their role in securing business loans or guarantees, and the time and cost required to replace their expertise.