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Are you under insured?

Holding back on insurance can be tempting when money’s tight. But managing your risks could mean the difference between going under and thriving. Here’s what you need to think about.

“Most small businesses are under-insured,” says Insurance Council of New Zealand Chief Executive, Tim Grafton.

“It’s partly because owners are too busy sailing into the wind to keep ahead to think about what could hit them from the side or beneath. Insurance doesn’t make risk disappear, but is one tool in your resilience and continuity planning.”

Types of insurance to think about

Liability insurance

This protects you and your business if someone sues you or an employee. It also covers you if accidentally you:

  • break the law 
  • make a professional mistake, eg giving bad advice.

Business interruption insurance

This covers you against losses resulting from an interruption to your business, eg when you can’t trade after a disaster, like a fire or an earthquake.

Commercial property insurance

This covers you for damage to buildings you own, eg from fire, flooding or an earthquake. Note: If you work from home, household insurance does not automatically cover your property if you’re using it for work.

Asset insurance

This covers items your business owns, eg computers, furniture, tools and stock, from things like loss and damage. Make sure you know what your policy covers you for. There are two main types:

  • indemnity — the most common policy type, which takes wear and tear into account when paying your claim. 
  • replacement — this policy pays full costs of replacing an item.

Commercial vehicle insurance

If you use a vehicle for work — whether you’re a company, sole trader or contractor — you may need a commercial vehicle insurance policy. Check with an insurance broker.

Transit insurance

This covers you if equipment or stock is damaged when you or a freight company is moving it.

Talk to a broker

It’s best to talk to a professional insurance broker about which policies are right for you. They can also help you to assess how much you can afford to pay for a policy and find the best deals.

The sort of policy you’ll need will differ depending on the kind of work you do and where you do it, eg if you’re:

  • a tradesperson working on building sites
  • offering professional services, eg IT or accounting 
  • working from home, eg in your spare bedroom or garage 
  • a retailer.
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