5 types of insurance small businesses should consider
Insurance. It’s not a word that immediately fills you with excitement. However, it’s an essential for many business owners as they seek to protect what they’ve built. After all, it could just take one criminal act, one accident, one mistake or one natural disaster to wipe all that hard work out in an instant.
Here’s what you need to know about small business insurance:
Why small businesses should seriously consider insurance
“Insurance is important for small businesses because the cost of something going wrong can be the difference between surviving and bankruptcy,” says Tim Grafton, CEO of the Insurance Council of New Zealand.
“Small businesses tend to run on leaner margins, so when something unexpected happens, there tends to be less capacity to absorb the cost.”
In New Zealand, there are no mandatory insurances, but Grafton says, “We recommend small businesses get commercial property insurance and business interruption cover at a minimum, as well as either public liability insurance or professional indemnity insurance, depending on the type of business in operation. Anyone operating digitally should also look into cyber cover.”
What are the main types of insurance for small businesses?
1. Commercial property insurance
If you own or rent a home, you’ll no doubt be familiar with home and contents insurance – commercial property insurance is a similar proposition, it’s just for your business. It can insure your building from damage from theft and fire, and many insurers also cover some natural disasters – just make sure you know what it is you’re covered for. If you have business premises, or you keep any business belongings in a workspace, this is something worth considering.
2. Business interruption insurance
What would happen if you arrived at your restaurant or retail store one morning to discover the premises flooded from the units upstairs? You can’t open, you’ll lose takings, and you still have the staff to pay. Business interruption insurance could compensate for some of those losses, and help you get back on your feet.
3. Public liability insurance
If you welcome customers onto your business property, or you’re working at a client’s site, public liability is an insurance you may need. It can protect you for incidents such as accidental damage to a client’s property, an injury suffered in your store or you inadvertently make someone ill.
4. Professional indemnity insurance
If you’re in the business of giving advice, or your work could possibly cause consequential damage for your client and they make a claim against you, professional indemnity insurance can cover you.
5. Cyber cover
If any part of your business is conducted online, cyber insurance is worth a thought. It can protect you from losses or claims arising from online risks, such as being hacked, loss of data or being held to ransom.
Insuring your future
As a small business owner, it’s vitally important to at least know what your risks are.
“By insuring your assets and covering yourself for business interruption and liability, you’re building your business’s resilience and ensuring it can continue operating into the future,” says Grafton.
“It’s worthwhile meeting with a broker as they can determine what cover a small business may need for its own circumstances and help find or tailor a policy just for that.”
Grafton also warns people operating their small business from home to not assume your home and contents insurance will be sufficient in the event of something going wrong.
“Anyone running a business out of their home may not be covered by their standard house and contents insurance, especially if they haven’t told their insurer that they’re working from their property,” he says. “We recommend calling your insurer to discuss your options and make sure you’re covered.”
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