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BUSINESS ADVICE •  20 OCTOBER 2022 • 7 MIN READ

10 types of insurance for small businesses in New Zealand

Business partners looking at insurance documents

In August 2022, there were about 546,000 small businesses in NZ, representing 97% of the firms in the country. We’re guessing that you’re reading this blog because you’re one of them. 

97% of the businesses are small businesses is a staggering statistic, and it begs the question: How can they all stay safe and stay in business for longer? 

And, closer to home, what actions can you take as a small business owner to reduce your risks, be less vulnerable when mistakes happen, and do the right thing for you, your staff, clients, suppliers, and the public? 

First up, get insured. 

The type of insurance small businesses need depends on several factors which include: the industry or trade you’re in, what kind of assets and liabilities you have, whether you employ people or not, the size of your business, and your attitude towards risk. 

Small business insurance asks: what if? What if we make a mistake, what if someone gets hurt, what if our property gets damaged? What can we do when things go wrong? And how can we be confident our assets, cashflow and reputation are protected?

Before we continue: this blog includes information that is general in nature only and you should always seek specific advice from a professional for your situation. 

So, let’s look at the top 10 insurances for small businesses and why you should consider them.

First up – here are the compulsory types of small business insurance. Next, we’ll move to optional insurance cover.

1) Workplace health insurance

In NZ, everyone is covered under ACC whether they are at work, at home, or anywhere for accidents and mental injuries suffered because of an accident. But as a business owner, it is always good when you cover your employees for extra workplace health insurance for situations not covered by ACC. You can add that as an extra benefit for your employees to attract good people to work for you. 

2) Third-party personal injury/compulsory third-party insurance (CTP).

It is highly recommended to have a third-party personal injury insurance, if your company owns a vehicle or several vehicles. This policy will cover compensation costs in the event people are injured or killed when your company vehicle is involved in an accident.

3) Public liability insurance – compulsory for some types of businesses.

As a small business owner, we’re sure you do all you can to protect the safety of your customers, suppliers, and the public. But mistakes and accidents do happen. 

Some contracts with landlords, suppliers and customers stipulate that public liability insurance is compulsory. These are the most common reasons why you would need it.

  • You own premises where your clients frequently visit.
  • You go to other people’s premises for your work.
  • You run off-site activities or events that the public attend.
  • You run your business from home and people come to your home for business-related reasons. 

If your products or services cause harm to people or to property, you could be liable to pay for compensation and your legal fees to defend yourself. Claims like this can destroy a small business because costs can run into hundreds of thousands of dollars. Examples of when you can claim include the following.

  • A client or member of the general public has visited your place of work and they have tripped over a wire or slipped on a wet floor.
  • You damage somebody’s property by dropping it or spilling a drink on it.

Public liability policies include:

  • cover for legal and defence fees
  • compensation for personal injury
  • compensation for property damage
  • the option to extend to product liability and negligence claims.

Let’s move on to small business insurance cover that’s not compulsory but still important to consider. 

4) Professional indemnity insurance.

If you’re in the business of providing a professional service or advice, you should seriously think about professional indemnity insurance. 

Let’s face it that definition is broad – you could be a chiropractor or consultant; health professional or lawyer; graphic designer or accountant. 

This insurance protects you, as a professional, against damages and legal costs associated with defending yourself against claims raised by your customers. 

Your clients may seek compensation after they’ve experienced financial loss and allege that happened because:

  • you made a mistake
  • you overlooked or omitted a critical piece of information
  • you misstated a fact or provided misleading advice
  • you lost some important documentation
  • you failed to meet a deadline
  • you unintentionally defamed someone
  • they misinterpreted your advice or service.

Without insurance, going through the process of repairing the damage caused by an act, omission or breach, is costly, stressful and could severely damage your reputation and finances. 

Professional indemnity protects your assets, reputation, and your financial situation. It does this by covering investigation costs, legal costs, and damages awarded to your client (to the value of your policy cover).

Although it’s not compulsory across the board, many professions require you to hold a professional indemnity policy so you can deliver your services.

5) Business assets insurance.

If you have physical assets, it’s wise to cover them. You can take out insurance to protect your stock, building, contents, tools, and general property from financial loss due to loss, malicious damage, fire and theft, and natural events like earthquakes, lightning, storms and floods. 

6) Commercial motor insurance.

If your business regularly uses a vehicle or you have a small fleet – whether it’s a car, ute, or delivery vehicle – you should think about commercial motor insurance. Cover typically includes driver repatriation, signwriting, and cover for replacing keys and locks.

7) Business interruption insurance.

Protecting your assets often isn’t enough. 

You also need to know that your cash flow and income are taken care of should the worst happen. Business interruption insurance covers the costs of rent or mortgage payments, and your fixed utility charges (electric, gas and water bills) due to the damage and disruption caused by events like a fire, storm, theft or even a burst water pipe.

8) Management liability insurance.

None of us wants to dwell on this fact: sometimes people we thought we could trust behave unethically or illegally. If you’re not properly covered for this risk, you could be vulnerable to losing your business and your personal assets.

Management liability insurance protects your company and the people running your company should a senior manager or company director behaves – or face an allegation of behaving – unethically or illegally which results in an individual or business loss.  

It may include behaviours like:

  • health and safety breaches
  • sexual harassment
  • unfair dismissal
  • defamation.

Management liability also protects your business from dishonest acts carried out by your employees – for example, theft of stock or fraud. 

9) Cyber liability insurance.

Does your business have a website? Do you store sensitive information?

Chances are you’ve answered yes to at least one of those questions. The good news is cyber liability insurance protects you in the event of a cyber attack and covers the cost of keeping your data secure.

Hackers may deface your website which is not only upsetting but disruptive and financially damaging too. They may also get into your database and access sensitive data. A cyber liability claim will take care of the expenses incurred from the disruption to your business caused by a cyber attack.

10) Tax audit insurance.

You never know if your business will be subject to a random audit by the IRD. If you get contacted by IRD commissioner,  it can be time-consuming, stressful, and expensive to manage and pay for completing the audit yourself.  

Instead, tax audit insurance gives you peace of mind by covering the costs incurred during an audit such as the professional fees from accountants, lawyers and bookkeepers.

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Next steps – talk to a professional for personalised advice on your small business situation.

Now that you’ve familiarised yourself with the main types of insurance cover, it’s time to take the next step. You can choose to buy insurance policies directly from the insurer or talk with an insurance broker.

An insurance broker is particularly helpful if your business needs are complex and you have to manage multiple high-risk scenarios. They can give you specific advice based on your situation and the type and level of cover you need.

A lot of insurance companies provide bundles or packages, which can be cheaper than buying individual policies. Some bundle policies are based on the industry you’re in.

Don’t feel pressured to take insurance or become over-insured. But you do need to weigh up the cost of insurance premiums against the cost of repairing the damage when things go wrong. Even one claim could ruin a small business that doesn’t have adequate insurance cover. 

You can find a broker through the Licensed Insurer list. it is safer and better to choose a licensed and qualified broker to give you proper advice. 

We’ve got your accounting covered – get in touch with Beany today.

Beany works with hundreds of small businesses across NZ who care about protecting what matters the most and growing their business. We take a forward-looking approach, to help you feel empowered with the right financial information at the right time. 

We believe that your accountant should be on your side, supporting you to make decisions that are right for you and your business.

We have a dedicated team of remote accountants to take care of your business no matter where you are, so you can focus on growing your business. We remove the “fluff”, break down barriers, and get things done. Looking out for you is what we’re all about. Get started for free today.

Katie Rickson

Katie Rickson

Freelance Copywriter and Editor

Based in the beautiful rural town of Helensville in Auckland. A soft spot for long-form content, she loves writing blogs, case studies, and white papers for specialists and service-based businesses. She is also a mum and enjoys acting, dancing and writing poetry. 

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