If you were to write down the risks your small business currently faces, how many do you have protection for? And are you sure that protection will cover you if the worst were to happen?
From reducing costs to working from home and moving operations online, New Zealand businesses have changed a lot since the start of the pandemic.
And with more than three-quarters of small business owners saying in a Vero industry survey that they plan to keep at least some of the changes, this appears to be the new normal.
But despite the high level of changes to the business, this isn’t reflected in updated business insurance.
Some 20% have decreased their cover, while 19% reduced the number of things covered. Perhaps even more worrying is that 7% chose to go without business insurance at all.
From the Covid-19 pandemic to supply chain issues and the rising cost of living, New Zealand small businesses have had to contend with a lot recently.
This has had an impact on the revenue of many businesses, causing some to look for ways to save money.
It’s tough out there, and it’s tempting to put your insurance on the chopping block. But if it’s tough now, imagine what it could be like if a claim was made against you.
For example, imagine if this New Zealand engineer didn’t have Professional Indemnity insurance after a customer alleged the small business negligently laid out boundaries that were set too far apart**. The slabs needed to be reconstructed, and the total bill came out to be more than $100,000.
After some deliberation, the total settlement ended up being $45,000, which was covered by the insurer.
Tips to ensure you are covering your risks
To avoid a situation where you don’t have enough insurance to cover you if a claim were to arise, small business owners can follow these simple steps:
Calculating your contents: Keeping a clear record of your contents could help you avoid not having adequate insurance in the event of a claim. Keep a copy of your receipts and proof of purchases by scanning and storing them in a secure cloud program. You could also take photographs of your stock and contents.
Understanding the real costs: Especially these days with inflation running rampant, the cost to replace certain contents and building fixtures can change with time. It’s important to be aware of these costs and if they have changed in time to update your policy.
Growing up: As your business grows, so might the need for your level of cover. If your business is now holding more stock, or expanding its product range, to avoid being underinsured it may be worth reconsidering the level of cover that your business may now require.
The bottom line
While the current situation is tough, there are some things New Zealand small business owners can do to protect themselves from even worse situations.
Regularly scheduling some time to consider your exposure to risks could help avoid problems later down the track.
Think about what risks your business is exposed to and think about the possible scenarios that could happen if you weren’t protected in the event of a claim.
After that, consider jumping online to compare quotes so you could then decide whether the price of the cover justifies the protection.
Although reviewing your cover at renewal is a great time to consider your options, you could check in at any point throughout the year.
* This information is general only and does not take into account your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording. **The provision of the claims examples are for illustrative purposes only and should not be seen as an indication as to how any potential claim will be assessed or accepted. Coverage for claims on the policy will be determined by the insurer, not BizCover.
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