In the current economic climate, inflation seems to be on the tip of most business owners lips and is the driving force behind changes like the increased costs of living. Business insurance isn’t exempt when it comes to the impact of inflation, and in our quick guide we take a look at how inflation influences business insurance and some tips of managing your policies.
Inflation in flash
The Reserve Bank of New Zealand describes inflation as a rise of average prices through the economy. It means that money is losing its value. This is usually caused when there is too much money available to purchase too few goods and services or the demand in the economy is outpacing supply.i
What is impacted by inflation?
The flow on effect of the increased costs in goods and services means there is a general increase in the costs across the board, including things like food, petrol and electricity for example. These prices can be risen due to impacts and pressures from rising global market pricing and supply chain issues.
Not only do these increased costs affect our everyday expenses, but also the costs of running a business too. Something which we will go into further detail about below.
How inflation impacts business insurance?
There are a variety of industries and areas of business that are seeing the side effects of inflation. These are a few examples:
- Building costs and labour- Building supplies and construction materials have significantly increased. This has a flow on when it comes to things like a property claim, with a pressure to get raw materials and the manual labour to perform the required building or repair work.
- Contents- The cost to replace certain business assets may have increased since you originally purchased them.
- Vehicles- if you have a business vehicle, you may need to factor in the extended time frames to get it repaired or replaced due a global shortage and lengthy delays.
Tips to manage your business insurance during inflation
If you haven’t taken the time out to review your business insurance policies, now might be an opportunity to spend a moment to check in on your coverage. We understand how busy things can get when you’re a small business owner, so we’ve put together a few things to keep in mind when checking your policies.
- Sums insured– When was the last time you did the math and added up how much things like your building and business assets are actually worth? As we can see from the impacts of inflation the costs of things like building materials and labour are increasing.
Check the amount that you have noted on your policy and factor in these extras costs.
If you have done any renovations or extensions to your business building, you may want to check that these are also included on your policy and that the sum insured amount extends to include these.
- Limits and sub-limits- Just like the sum insured for things like your building and business assets, reassess the amounts that you may have in place for policies like your Professional Indemnity insurance* and Public Liability insurance*.
- Review the terms and conditions- It doesn’t hurt to refamilarise yourself with the terms and conditions of your policies. Pay attention to key sections of your policy like exclusions, extensions can ensure that your type of coverage is still appropriate for your business and its needs
Reviewing your business insurance policies is also an opportunity to see if the type of coverages you have in place are still suitable for your business and its exposure to risks. Businesses grow and change, and so do their insurance needs.
To chat about your business insurance, get in touch with BizCover today. We know how busy things can get when you’ve got a small business to run, so leave your small business insurance shopping around to us. We believe in making the process to get your cover organised easy and straightforward, with no-dramas!
Whether it is Building insurance* for your warehouse or Portable Equipment cover* for your personal trainer gear, we’ve got business insurance solutions to help safeguard your small business.
Visit bizcover.co.nz and get insurance for your engineering business without the stress so you can get on with your day. Prefer to get on the phone and have a chat? You can find us at 0800 249 268.
*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. © 2023 BizCover Limited.
