First Guide To Business Insurance

The following is a simple small guide to use as reference, and also remember that not two insurance policies are made the same way and usually also can not readily compare premiums between policies as both may have different limits, etc.

Also, it is best to discuss your needs with an experienced broker, like SUN INSURANCE, where you may be presented with different options, and the broker represents you and not the insurance company.

Types of commercial insurance

There are 5 main types of commercial insurance:

• commercial property

• business interruption

• commercial motor

• liability

• cyber

  
  

Commercial property

Whether you are a small business owner or a Body Corporate, commercial property insurance can be complex. It pays to consult an insurance adviser to help you assess your requirements and the range of products and solutions that are available.

Discussing your property portfolio insurance with the specialists will not only help you understand the various solutions but also make you aware of the local and international relationships that can help achieve the cover you need. This may be in the areas of

• natural disasters

• fire, flood and accidental damage

• breakdown in service machinery, such as lifts and air-conditioning systems

• loss of rental income

• liability risks.

  
  

Often commercial property insurance requires finding either co-insurers to share the risks with or developing a layered structure. These insurance structures can be complicated — this is where professional advice is invaluable.

Advisers can help you consider everything from setting premium allocations, premium financing and premium collection to competitive pricing, coverage, exclusivity and other added value benefits.

Business interruption

When you suffer a business interruption, the financial loss can be more devastating than the physical loss.

Business interruption insurance (or business continuity insurance, as it’s sometimes known) can help minimise the financial impact if an interruption to your normal business operations occurs following a physical loss to your assets. You are in business to make a profit, why not protect that if property damage restricts your ability to maintain turnover?

Business interruption insurance is designed to

• help you to carry on through the event and after the damage has been repaired

• help fund your increased operational expenses

• inject lost profits into your balance sheet

  
  

Business interruption cover can also be purchased to protect the income or profit of a business following insured loss or damage. This type of insurance may cover

• gross profit

• wages

• payroll

• redundancy payments

• additional costs of working

• reinstating records

• loss of rents

  
  

Business interruption policies are commonly extended to include suppliers, customers, denial of access and public utilities extensions.

Business interruption insurance makes sure you have the necessary funds to

• maintain your income stream while your doors are closed

• pay for additional expenses, such as temporary premises or additional costs to source product

• advertise to let customers know that you have moved to a new location or any other effects of the business interruption

• meet financial obligations to the bank, shareholders and staff

Commercial Motor

Commercial motor insurance is similar in manner to personal motor insurance in that it allows an entity to take out comprehensive cover, third party cover or third party fire and theft cover. 

Commercial motor cover may extend to commercial vehicles, company cars, business fleets and motorcycles.

Liability

Legal liability can take many forms. Commons types include:

• negligently causing loss to someone else’s property or business

• negligent professional advice when providing professional services

• unintentionally breaching a statute

  
  

Liability insurance can also take many forms. For individuals acting in their private capacity, motor vehicle insurance covers the insured for damage to others’ property while driving.

For people acting in a commercial capacity, the main forms of commercial liability insurance are

• general public and products

• employers’

• statutory

• employment practice

• bailees’

• professional indemnity

• directors’ and officers’

• trustees cover.

  
  

As always, the terms and conditions of each policy will vary. It is important to read your policy wording and seek advice from your insurance adviser.

General public and products liability

The most basic form of liability insurance is public liability. It provides legal liability protection from damage to third party property or bodily injury.

This type of cover is important for anybody who occupies or leases property in connection with their business, and/or provides a service away from their premises (such as a decorator, painter, motor mechanic, electrician, plumber).

Products liability cover is important for anybody supplying products such as a retailer, importer/exporter or manufacturer. Cover includes defence costs which are usually in addition to the limit of indemnity.

Public and products liability insurance is occurrence triggered.

Employers' liability

Employers’ liability insurance provides cover for personal injury to any employee of the insured. This includes any obligation for which the insured may be held liable under the Injury Prevention, Rehabilitation and Compensation Act 2001, or any similar or amending legislation.

Cover can includes defence costs.

Employers’ liability insurance is triggered when a claim is made.

Statutory liability

Statutory liability insurance provides legal defence protection and cover for fines for some breaches of statutes, such as the Resource Management Act, Financial Reporting Act and Building Act.

Occupational Health and Safety legislation prevents parties from insuring for workplace health and safety fines.

Cover can includes defence costs.

Statutory liability insurance is triggered when a claim is made.

Employment practice liability

Employment practice liability insurance provides protection for legal defence and court awarded settlements for employment law breaches.

Cover can includes defence costs.

Employment practice liability insurance is occurrence triggered.

Bailees' liability

Anyone who holds third-party goods or property under their care, custody and control has a bailees’ liability exposure.

Cover includes defence costs.

Bailees’ liability insurance is occurrence triggered.

Professional indemnity

Professional indemnity insurance provides protection against liability costs arising from the provision of incorrect or faulty professional advice or design, as well as defamation.

Cover includes defence costs.

Professional indemnity insurance is triggered when a claim is made.

Directors' and officers' liability

Directors’ and officers’ liability insurance provides protection for directors and officers for wrongful acts committed within their capacity as a director or an officer.

Cover includes defence costs.

Directors’ and officers’ liability insurance is triggered when a claim is made.

Trustees cover

Trustees cover is designed specifically for trustees for cover under the above-mentioned policy categories.

Small business guide

If you need help with insurance for your small to medium business, we have another blog that goes into in in detail.

For any questions about commercial insurance and how to protect your business please call us any time for a confidential discussion:

• Mob 0273 000666

• Off 09 360 5555

• E mail info@suninsurance.nz

Business Insurance with SUN INSURANCE