Factors that affect cost

Like most insurance quotes, it depends on circumstance. The amount you pay for cover depends on what type of business you’re running, how many people you employ and what sort of extra risks you run. Chances are if you’re running a light team of four or five librarians, your insurance will cost less than if you have fifty architects planning homes across the country.

What can I do to reduce how much I pay for cover?

The following are some key steps you can take to avoid overpaying for cover you don’t actually need:

• Increase your excess. Like most insurance policies, raising what you pay in case of a claim can drive down your ongoing premium costs.
• Bundle up. Taking out all your policies with a single company can net you a handy discount.
• Skip useless extras. If you don’t need it, don’t pay for it! An insurance broker can help you figure out what’s likely to matter for your business and skip the rest.

Is business insurance worth it? Consider the following scenarios

You’ve worked hard to get where you are. Maybe you built your business from the ground up or you’ve taken it and turned it into something to be proud of. So why risk it? No matter how careful you are, accidents happen, mistakes get made and people file complaints out of anger or spite. Without insurance, one bad situation can put you out of business for good.

What would you do if someone got really sick or a worker was injured on your site? How would you cope if a flood ruined your building or a thief made off with thousands of dollars of stock or private data? These are important questions you’ll need to answer.

Here are a few situations where business insurance just might save you:

You’re running a small medical practice

You own a restaurant

In the course of an evening, one of your waiters trips and spills boiling hot soup on a customer. Business insurance can help you with recompense for the injured person and cover any possible legal fees that you otherwise could face.

You’re the owner of a retail outlet that sells expensive jewellery

When shopping around for insurance, you need to know what you want in order to get the best deal. Here are some simple checks to consider when browsing:

1. Figure out your business risks

Every business is different. Depending on how your business works, you’ll naturally have different risks. Determine the most likely issues to come up and which would be most damaging without insurance. If you have employees, what would happen if they were dishonest or got injured? Do you have a product or service people might be unhappy with? How vulnerable are you to theft or disasters?

2. Compare policies that cover your risk

Once you’ve figured out the risks, you can pick a policy. You might need one of the three main kinds of business insurance or some combination of them. Figure out what special circumstances apply to your business. Are you building homes or moving merchandise? This determines which extras you may need.

3. Picked a policy? Now look at what you are covered for exactly

Ensure you understand the policy you’re taking out. Are you covered for the worst situations? Is your insurance limit high enough to cover your most valuable assets if they get damaged or stolen?

4. Check what’s not covered

This is almost more important than what you are covered for. Every insurer places caveats on claims. These are situations and circumstances where they won’t acknowledge a claim. Investigate these carefully before taking out a policy. We’ve listed some of the most common in the “Exceptions” section below.

5. Consider an insurance broker

Using an insurance broker to choose the best policy for you can save you money overall. Finding the perfect policy can take a long time and can cause a ton of stress. Even after all this, you might end up with an inadequate or an over-the-top policy. Insurance brokers can walk you through the process, assess the biggest risks your business is likely to face and choose the best policy for you.

Run a small business? Here’s why cover is essential

If you run a small business, you likely don’t have to worry about many of the same problems that a much larger business would face. But this doesn’t mean that you’re home free. Small businesses have a number of unique risks that a larger company doesn’t.

These can include the following:

• Small customer pool. How many customers make up the bulk of your business? If one of your regular customers stopped using your services for any length of time, it could lead to a catastrophic drop in revenue.
• Few suppliers. How many suppliers do you generally rely upon? If one of your suppliers stopped supplying you, it could severely slow down business or bring it to a grinding halt.
• Employee issues. These are wide-ranging and can include staff seeing your business as temporary employment on their way to another job, leading to high turnover rates. You may have a few employees who are crucial to your business leave and throw things into chaos. It’s even possible that employees who are necessarily given a lot of freedom in running important parts of your business abuse your trust and commit fraud.
• Limited premises. Small businesses are frequently tied to one location that is vital for their operation. What would happen if a storm or fire heavily damaged the premises or the business outgrew the location? This could cause dangerous and expensive disruptions.
• Reputation. Many small businesses live and die by their reputation in a community or industry. How would you cope if your company were accused of fraud or dishonesty?
• Cyber risk. Disruptions to power, Internet access or machine function can completely shut down a business’s trading capability. A virus ruining your computers or a power outage can have very expensive consequences.
• Small financial overhead. If you trade on credit, it’s possible you may be called to account. What would you do in that situation? What if competitors were to appear in your market and disrupt your finances with similar services and lower prices?

Does business insurance cover loss of income?

Under business interruption insurance, a business will be covered for loss of revenue that it suffers following an unforeseen event. This means that while the business is being repaired, cash will be provided to account for the loss of revenue but not for personal income.

The benefit will be paid until the end of the business interruption period, which is determined at the time of application. This is known as the indemnity period.

• How long should my indemnity period be?

  This will differ from business to business, so you will need to take the time to assess the risks that face your business and how long they could take to recover from. As an example, insurer CGU reportedly had a customer that was only able to recommence operating after a period of 18 months after the business was consumed by a fire.

Still not sure? Some final questions you might have

• How do I make a claim?

  Your insurance provider will have supplied a number and instructions about how to make a claim. In most cases, you will need to supply proof of ownership or legal responsibility and as many details as you can about your claim.

• I already have insurance, but I think it's in need of a review. What can I do?

  Have cover in place but not sure if there may be something more suitable out there? Here are some steps to review existing cover:

  • Assess how your business has changed in the last 12 months. Has your number of staff grown or decreased? Have you obtained new assets?
  • Cut cover you don’t need. Do you have cover in place that is no longer relevant to the risks your business has? Can these be trimmed back?
  • Add cover for any new risks your business is now facing. Do you face new risk events that could cause a loss of revenue?

• Is it worth using a broker to help me find cover?

  • Business insurance can be complex. There is a wealth of business insurance policies available on the market, each of which has been designed to meet a specific need. Determining the right type and level of cover for your business can be quite a difficult task, so it pays to have help.
  • Brokers are experts. Business insurance brokers have a wealth of experience and an in-depth understanding of the business insurance market. They know which policies are available and which ones will be right for you.
  • Brokers work for you. Just like your accountant works in your best financial interests, it’s the job of a broker to do everything they can to get you a suitable insurance deal.
  • Brokers know your business. A good business insurance broker will take the time to understand the ins and outs of your business. This will give them the information they need to formulate a reliable insurance strategy that matches all your needs.
  • Brokers know the market. A business insurance broker knows exactly what policies are available on the New Zealand market. They can hook you up with policies and insurers that you may be unaware of if you were simply trying to arrange cover yourself.
  • There are specialist brokers available. You may be able to find an insurance broker who specialises in finding cover for businesses in your industry. This ensures that they will have an even greater knowledge and understanding of the risks facing your company

• When won't I be covered?

  Like any insurance policy, it’s equally important to know when you won’t be covered. You can avoid losing out by checking the exact details of your policy, but there are a few that most policies won’t cover. You’ll probably lose out if your claim involves the following:

  • War, rebellion or insurrection
  • Government-approved confiscation, requisition or destruction of your property
  • Radioactivity
  • A company you acquired after taking out business insurance or any assets related to that company
  • Unoccupied buildings or premises
  • Damage to buildings by lightning, earthquakes or impact by road vehicles or falling buildings
  • An electronic device or software that isn’t Electronic Date Compliant
  • Aggravated or punitive damages or fines
  • Obsolete equipment that is no longer used in the business

Icons sourced from the Noun Project

• Injury support by Gan Khoon Lay
• Dropped by Jenie Tomboc
• Food by Mister Pixel
• Talking by Llisole
• Rules by Marie Van den Broeck
• Shopping by CombineDesign