What type of business insurance do I need?

Business insurance is a way of making sure your organisation is covered financially if things go wrong. There are different types of cover that insure different types of incident or issue, and your business insurance needs will be unique to your organisation. Even if your business is just getting started, or only has a few employees, business insurance cover could save you a lot of headaches down the line. 

Here, we explain some of the types of business insurance, and why having the right kind of business insurance is so important.

How to get the right business insurance solution 

Before we explain the different types of business insurance cover, a quick caveat: this is a general guide to the main types of business insurance policies, but all insurance policies will be subject to underwriting, and have limits, exclusions and conditions. It’s really important to get the right business insurance package for your business, no matter what size it is, as not having enough cover could end up being very costly. 

When you’re ready, MAS can help you find what business insurance is right for you. If you have questions about what your business is covered for, or want to find out about what kind of business insurance you require, give a MAS Adviser a call to chat.

Buildings cover

Buildings cover is insurance for the buildings used for business purposes, including service facilities, fixtures and fittings like fences, gates or sealed driveways and parking areas.

If you rent the place you run your business from, the most common arrangement is that your landlord is responsible for arranging business insurance in respect of the building, and the lease often specifies that tenants pay the premiums. Check your lease or speak to your landlord if you’re unsure. 

If you own your business premises, you’re responsible for making sure you have the right buildings insurance for it.

If you’re updating or making any changes to the building you operate from, you should update your insurance, or ask your landlord to do this for you. 

Contents cover

Contents cover is insurance for your physical business assets that are not fixed. This could be your computers and phones, stock, equipment, and furniture. You’ll insure your business contents for a ‘sum insured’, which is the amount it would cost to replace all of your contents at today’s prices. 

The biggest pitfall for contents insurance for businesses is underinsurance, which means your sum insured wouldn’t cover the cost of replacing all your business’s contents. Even if you’re a small business, you might be surprised at how much buying all your contents again would cost.

You should also be wary about only insuring your contents for the price you paid for them, as prices for a lot of things can increase, and often quite substantially. For example, if you bought a piece of equipment for $10,000 a few years ago but it would cost you $15,000 to buy it new today, it’s important to make sure your contents insurance covers you for that current replacement value. Business owners should check every year that their sum insured is still accurate and maintain an asset register. 

Legal Liability cover

Legal Liability insurance covers you if you become, or are alleged to be, legally liable for accidental bodily injury as well as accidental property damage to another person or person’s property. Legal liability insurance can cover the cost of defending a legal claim against your business regardless of whether or not you’re found to have been negligent. If you are found negligent and are ordered to make a payout, it can cover these costs too. 

MAS Buildings cover and Contents cover policies for businesses both automatically include $2 million of Legal Liability cover. 

MAS’s Legal Liability cover has some exclusions, like liability that comes from faulty design or giving incorrect advice.

Employers Liability cover

Employers Liability cover protects you if an employee of your business is injured while on the job, and you are found legally liable for the accident.  Employers Liability covers two things: the cost of any damages that a court orders you to pay, and reasonable defence costs.

The cost of Employers Liability is generally determined by the number of employees a business has. ACC claims are specifically excluded from this cover. 

Statutory Liability cover

Statutory Liability insurance covers businesses for some fines and penalties, and defence costs, that result from them being legally liable for accidentally breaching certain Acts or statutes. This type of cover generally has a liability limit, but extra cover can be bought. It will generally be limited to all Acts, except the Acts listed in your policy document. Fines or infringement fees under the Health and Safety at Work Act 2015 are specifically excluded.

This type of insurance can benefit all types and sizes of businesses. You never know when one of your employees, or your business, is going to be accused of breaching an Act. Even if it’s determined that you haven’t deliberately breached an Act, statutory liability cover will cover your defence costs, which can add up very quickly. 

Business Interruption cover

Business Interruption cover can assist you if damage to your contents or building results in a drop in turnover. Having this policy will make sure you can continue to cover your ongoing expenses while your business is in the process of getting back to full operation. It covers outgoings that don’t stop when your business activity stops, such as salaries, rent, or the cost of leasing equipment not damaged by the loss. 

You can choose the period for which your drop in turnover is covered, and it’s generally recommended that this should be at least 12 months, as events like fires or earthquakes could mean your building is inaccessible for a long time. 

Employment Disputes cover

This type of business insurance covers defence costs and any damages if an employee accuses a business of accidentally breaching an employment agreement. Employment Disputes policies will normally have exclusions for things like claims for harassment and intimidation, or strikes and lockouts, so check your policy documents or, if you have Employment Disputes cover with MAS, give us a call with any questions. 

Employee Dishonesty cover

Employee Dishonesty cover is designed for the loss of money, product or other property belonging to your business, as a result of dishonesty or fraud by your employees. Your business insurer will generally look after the investigation and recovery of costs for this kind of dishonesty, and will often allow 18 months from the time the crime took place to the time a claim is made.