Key takeaways

Almost 30% of SMEs are concerned they are underinsured.

If you’re afraid your business is underinsured, talk to an insurance broker about a range of options for cover.

Robust business interruption cover is a key policy to consider as weather events continue to occur.

After another extreme and unexpected weather event hit New Zealand - the Mangawhai tornado last weekend - it’s a timely reminder to business owners around the country to review their company insurance.

In upcoming Vero research, 63% of SME owners were not worried about their business insurance, while 27% said they were concerned they were underinsured.

“The real effects of being underinsured aren’t really evident until a total loss occurs and businesses need to start from scratch," says David Rayner, Head of National Partnerships at Gallagher Insurance.

"Without the right amount of insurance, they might not have enough to re-establish themselves back into the same position, or they may end up losing their business altogether,” he says.

Total loss events in Aotearoa New Zealand are generally caused by fires, electrical wiring issues for example, and weather-related events like storms and flooding.

Take advice on the best cover for your business through an insurance broker

David recommends that businesses, including startups, consult with an insurance broker who will advise them on the right cover for their business..

“As an entrepreneur, you invest time, effort and resources in your venture so it’s essential to identify potential risks that could derail you,” he says.

A robust business interruption policy can be an important way to save a business affected by an event like Cyclone Gabrielle which inflicted not only asset damage but an abrupt halt in cashflow for many, he says.

“Business interruption insurance pays for loss of profits, staff wages and additional increased costs of working following damage to insured business assets. This ensures that your business can continue to meet its financial obligations even when operations are temporarily halted,” says David.

Business asset insurance is useful too, providing cover for plant, machinery, contents, tools and stock in the case of fire, theft and natural disasters.

“Without it, a single catastrophic event could cause substantial financial loss and threaten your business’s survival,” says the Gallagher Insurance Head of National Partnerships.

Insuring against cyber attacks is growing in importance

Cyber liability is becoming an increasingly important insurance to consider for all businesses, as cyber threats are a real and present concern for organisations of all sizes, he says.

While only about 5% of New Zealand businesses have cyber insurance, this is due to change given the increase in cyber attacks out there.

“Cyber liability insurance safeguards your business from the financial and reputational repercussions of data breaches and cyber attacks. It also covers costs like legal fees, notification expenses, data recovery and crisis management costs,” says David.

Meanwhile, protection against liability claims is essential for any business, he says, as it protects against third party claims of property damage or bodily injury that arise from a business’s operations, products or services.

“Liability claims can be financially devastating, whether it’s a customer slipping and falling on your premises or a client alleging negligence in your services,” says David.

Knowing that you have a safety net in place allows you to focus on growing your business without constantly worrying about potential risks and liabilities, he says.

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Underinsuring your business is putting you at risk as the weather events keep coming