Types of small business insurance in New Zealand
If you own a small business, there’s no denying one the most important things you need to protect your assets is Small Business Insurance. But what kind of insurance do you actually need?
There’s no ‘one-size-fits-all’ when it comes to insuring a business, just as there are no two businesses that are exactly the same. Your insurance needs will vary depending on a variety of factors, such as, the industry you operate in, your trade, and the type of business you run. It will also be influenced by the size and location of your business and your appetite for risk. A tradie will face different challenges and risks, to say, a real estate agent, coffee shop, or an engineering firm. Just as a mobile or home-based hairdresser will have varying needs to those of a salon owner who has a shop front.
However, one thing’s for certain, and that is, finding the right insurance is an essential part of managing the risks involved in operating your business. And let’s face it – all businesses confront an element of risk on a daily basis, regardless of their size or the industry they are in.
It’s also important to note that some types of insurance are compulsory for many kinds of businesses, whether it’s a legislative requirement, an obligation as a member of a professional board or association or required by a contract you enter into with a landlord or a customer.
Fortunately, these days there are a variety of policy options to choose from and business insurance policies can be tailored to suit your individual business needs.
It’s wise to consider insuring your assets, your revenue, and your liabilities.
Public Liability Insurance
Every business should consider Public Liability Insurance – even home-based businesses. It covers you and your employees for potential liabilities if your products or services cause property damage. For example it can provide protection if, an employee damages your customer’s furniture whilst carrying out renovations to their house.
Public Liability not only covers the cost of compensation, but your defence costs as well. Without the correct level of cover, a potential claim could cost you thousands of dollars (or even hundreds of thousands of dollars), and could be enough to put a small business out of business!
Professional Indemnity Insurance
If your business or profession involves providing a service or advice, then Professional Indemnity (PI) Insurance is a must have. It protects professionals against liability for damages, and the legal costs associated with defending yourself against claims arising from an act, omission, or beach of duty in the course of your work. Your Public Liability policy does not provide protection if there is financial loss only or if the cause of the loss was a breach of professional duty, so it’s important you know the difference.
Professional Indemnity Insurance is applicable to many professions, such as chiropractors, consultants, engineers, architects, real estate agents, and accountants, just to name a few. In many professions, it is a requirement to hold a PI policy in order to render your services.
Each industry has its own unique set of risks which can be addressed in a policy tailored specifically for your profession.
Employers Liability Insurance
Employers Liability Insurance protects the company and the people who manage the company, such as the Company Director and Senior Managers, against the risks and exposures of running the business – your liability for mismanagement. It covers against allegations and acts of misconduct and legislative breaches, including statutory fines and penalties, defamation, statutory breach of duty, OH&S issues, unfair dismissal, and sexual harassment. It also protects a business against losses arising from dishonest acts such as theft and fraud by employees, including theft of stock.
Without sufficient protection, you could potentially risk losing not only your business, but your personal assets too.
Cyber Liability Insurance
If you have a website for your business or you store sensitive customer information on your computers or laptops, you should think about holding a Cyber Liability policy. Cyber Liability Insurance protects your business in the event of a cyber attack. Whether your website is hijacked and defaced, or your sensitive data and client information is stolen, the costs of repairing the damage and the legal costs associated with a data breach can have a significant impact on your business, not to mention the damage it can cause to your reputation.
Statutory Liability Insurance
Statutory Liability policies are designed to cover your inadvertent breaches of NZ statutes for your legal defence costs and in most cases, dependant on the applicable legislation, the resulting fines payable. Whether you are in marketing or a tradie, there is a myriad of legislation applicable to your work and industry. Contraventions of the Commerce Act and the Health and Safety Act are the most common pieces of legislation that businesses fall foul against. In most instances, insurers appoint lawyers with vast experience in these laws to represent you. Protecting your cash flow and the future of your business are two keys paramount to your success.
As with any purchase you make, doing your homework and shopping around is the best way to ensure you get the right cover for your business – and at the right price. The best way to do this is to use a comparison site where you can compare products closely and choose one that meets all of your small business needs. At the end of the day, having the right protection could mean the difference between continued success, and being left high and dry should you need to make a claim.
This is general advice only.