But before you call a broker or dive into signing up for a business insurance plan, it’s smart to identify the main risks your business faces. Some of these risks can be balanced by specific types of business insurance.

Types of business risk

What could go wrong in your business? Here’s a list to help you identify your specific business risks:

Risks to assets

  • Theft
  • Accident damage
  • Breakdown

Risks to premises

  • Fire or natural disaster
  • Damage during burglary

Risks to sales and/or production

  • Losing a key staff member
  • Stock damage
  • Loss in transit
  • IT crime, hacking, loss of data

Risks to finances and/or reputation

  • Employment dispute
  • Health & safety breach
  • Product recall
  • Being sued
  • Sudden loss of sales due to pandemic lockdown (or similar)

Types of business insurance that balance your key risks

Selecting the right types of insurance for your situation helps to ensure you carry enough insurance, without going overboard. Being under-insured is risky; being over-insured is expensive.

Here’s a quick guide to the various types of insurance your business might need:

Commercial property insurance

Just like you insure your home and investment properties, if you own your business premises they should be insured. Commercial property insurance typically covers natural disasters, fire flood and accidental damage, breakdown of lifts and air conditioning, and loss of rental income.

Following the Canterbury earthquakes, insurers now need more information about your building. They’ll want to know when it was built, the type of ground it’s built on, seismic rating and whether any strengthening work has been carried out. You might need to consult a structural engineer for help with this.

Liability insurance

As a business owner, you’re liable for property damage and personal injury resulting from your business activities. For example, if you’re an arborist and your work causes tree branches to fall and damage a car parked on the street, you’re liable for the damage. This responsibility extends to customers and suppliers who are injured while on your premises.

Liability insurance can pay for the financial damage caused by an event at your business address, as well as the actions of your employees and equipment when working offsite. In some sectors – such as law, medicine, engineering and financial advice – liability insurance is compulsory.

Be aware that there are two types of liability cover to consider – public liability and professional liability. A broker can work out which of these is best for you.

Vehicle insurance

This one’s a no-brainer. If you own work vehicles, they need to be insured against accidental damage and theft. Some business vehicle cover offers extra benefits like transport and towing expenses, legal liability protection and manslaughter defence costs. If you have employees under the age of 25 or on restricted licenses, check that your vehicle insurance covers them.

If you have an agricultural or horticultural business that owns tractors, quad bikes and other types of farm vehicle, there are insurers who specialise in cover for the rural sector.

Asset insurance

Does your business depend on other physical assets that aren’t buildings or vehicles? If the answer’s yes, you’ll need insurance to cover the risk of loss and damage to tools, plant and equipment. And don’t forget all the office furniture within your premises. Stock also needs to be covered, to protect your investment. If you’re a contractor, there’s a type of cover called contractors’ plant insurance to protect your gear wherever you’re working.

Business continuity insurance

Sometimes your business has to close down or slow down for reasons that are beyond your control. Business continuity insurance – also known as business interruption insurance – helps to minimise the financial impacts that occur following loss or damage covered by your business assets insurance.

For example, if your premises burn down and vital equipment is damaged, business continuity cover can provide financial backup while your business gets back on its feet.

It’s good to be aware that this type of insurance doesn’t apply to a pandemic, terrorism or war. These are regarded as ‘crown risks’, so the government will decide whether any compensation is available.

Machinery breakdown and stock deterioration cover

If your business depends on specific mechanical, electrical or electronic plant and equipment, you can organise machinery breakdown cover. A logical add-on to this type of insurance could be stock deterioration cover. For example, if breakdown of a fridge or freezer causes stored products or materials to perish.

Key person insurance

Imagine how your business could be affected if you or another key person couldn’t work for weeks, or even months, due to sickness or injury. Loss of a key person can result in a decrease of business productivity, revenue and customers. That’s why many businesses carry key person cover.

Cyber insurance

When your business relies on technology – anything from computers and websites to phones and EFTPOS terminals – you’re at risk of attack from hackers, data thieves, phishers and scammers. Cyber insurance helps you to recover from a range of attacks, including ransomware, viruses, malware, DDoS, loss of data and privacy breach.

Shareholder protection

If you’re part-owner of a company and another part-owner dies, a type of insurance called shareholder protection can provide the money you need to purchase their portion of the business. It can also extend to providing money for the bereaved family, who will suffer a sudden loss of income.

Import/export insurance

For businesses that carry the risk of international logistics problems, import or export insurance could be a crucial component in your insurance mix. These covers relate to loss or damage to goods during transit.

Get help from an expert

It’s possible you’ll want to work with a business insurance expert to select the right mix of cover for your business. Be sure to choose a broker or adviser who specialises in commercial insurance. You might even find one who focuses on your industry sector.