Material Damage
This is cover for your building, plant & equipment For buildings, an insurance valuation should be renewed every couple of years, this is to ensure that the building is insured for the correct amount. Plant & equipment should be insured for their replacement value rather than book value Some other non-standard covers you might need are: Customers goods, this provides full cover rather than the limited cover provided by your liability policy which will only respond if you are legally liable for the damage. Work in progress covers the added value as an item moves towards completion Finished goods which are worth more than the sum of their parts Anywhere in NZ cover, this covers plant, equipment & stock away from the premises such as workshop tools taken out, laptops and test equipment. Some businesses need specific policies such as Jewellers who need a Jewellers block policy – one thing to check, some policies require a minimum of 2 staff on site for cover to apply. Most importers/wholesalers have a standard material damage policy when a specific policy may provide them with far better cover and save on premium.
Business Interruption
This is one of the most important but least understood covers most businesses have It covers the loss of profits &/or additional costs a business has following certain events such as a claim under your material damage policy. Whole books have been written on how to calculate this cover, the following can only provide a very broad overview and a few questions to consider. Three scenarios to consider:
- A short-term event that only impacts you;
- A long-term event that only impacts you – for example your building burns down;
- A long-term event that impacts many others – CHCH earthquakes for example.
Following an event, the business needs to keep its staff & customers, if it is to recover from the loss. Are there non-insurance solutions that can help? For example: Having stock in more than 1 location, so you can supply your clients until new stock arrives Buying from more than 1 supplier, in case your supplier has an event (eg fire) that impacts you Supply contracts with others in your industry, where you pre-agree to supply each other on agreed terms should one of you suffer a loss. Most businesses under estimate the indemnity period they need (the Indemnity period is the maximum period of time the policy will pay out for). For many businesses’ location is very important or they need specific aspects to a building, meaning that another suitable building may not be available quickly or cheaply, most good sites will be occupied. Rebuilding might be the best option, but it can take 6-12 months just to get council approvals before building work can start. How do you keep your customers during this period, or survive as you rebuild your client base? If it’s an event like an earthquake any suitable buildings will be in high demand and council consents will take much longer, you may need to relocate and start from scratch meaning you will need your insurance cover to help for a minimum of 2-3 years. Maybe you need some additional costs cover to airfreight enough replacement stock, to keep your customers until the bulk of your stock arrives by sea or to pay the additional cost to have another business manufacture for you until you are back up & running.
Cyber Crime
The success and sustainability of every company in the 21st Century critically depends on IT reliability and security. Cyber insurance protects your business when antiviruses fail. You will be also be covered for third party claims, your costs and business interruption Globally NZ is one of the most targeted countries, for both theft of data or money and ransomware (where you are locked out of your computer system until you pay a ransom) This policy covers your costs to repair the damage, your loss of profits, costs related to notifying affected parties, PR damage and third-party costs.
Importer/Exporter
We can arrange a variety of covers from both NZ local insurers and offshore insurers, giving you access to covers not normally available to NZ businesses. It’s all well and good to recover your costs if a shipment were destroyed, but what about the profits you were going to make on that shipment, maybe you are supplying a seasonal product and you have now lost the whole seasons profit, how are you going to pay the wages, rent etc until the next season? What if you could insure your product for its sales price rather than cost (+ freight etc), so you retain the profit you would have made? Maybe Stock throughput insurance would provide you with better cover at reduced cost than the old traditional covers?
Charity, Church, Sports, Social, Religious and Community Groups
Charity, church, sports, social, religious and community groups need specific covers for assets, liability insurance and business interruption cover. In part this is due to compliance requirements, potential breach of a member’s private information, potential liability & PR issues and your revenue tends to behave differently to a normal business, should you suffer a major event. Many of these groups are run by a board of trustees, who can be held personally liable if something goes wrong with the organization they are a trustee of – meaning the trustee’s home might be at risk. Good trustee’s liability cover is very important to reduce this risk.
General Liability
Whether in business or in outside life we all have an obligation not to injure other people or damage other people’s property. For that outside life you have third party protection under your Motor Vehicle Insurance and cover for your legal liability as a tenant or owner of domestic property under your Home and Contents policies. For business you need General Liability cover. This operates under a multitude of names but is best known otherwise as Public & Products Liability or Broadform Liability. This is cover that protects your business when legally liable for damage to other people’s property and for bodily injury to non-employees. It further provides protection when your products cause damage or injury. The policy not only includes those amounts you become obligated to pay but also the costs in defending claims made against you. Cover further extends to include your legal liability under the Forest & Rural Fires Act; for property not otherwise insured in your care, custody or control; your usage of non-registered mobile mechanical plant and your legal liability for damage as a tenant under a lease agreement. Insurance cover can be arranged dependant on your needs, whether in New Zealand only or worldwide.
Employers Liability
In New Zealand we have an ACC system that for many years has been a shining example of how to manage the expectations of business should employees be injured in the workplace. In the 1970’s the ACC would provide lump-sum payments should there be a loss of limb or eyesight or hearing etc as well as the standard payments for medical bills and partial payment of lost wages. The ACC system however could not sustain these lump-sum payments so dropped them. ACC also had to look further at what it could afford to insure and what it couldn’t and had to look very carefully at what defined an Accident. Following this a number of injuries became excluded – these were generally injuries which took longer than 30 days to appear, for example the effects of passive smoking, melanoma, and fairly obviously Occupational Overuse Syndrome (OOS) or Repetitive Strain Injury (RSI). On this basis Employees can sue for bodily injury occurring in the workplace that falls outside of the Accident Rehabilitation and Compensation Insurance Act. Actions can be taken alleging recklessness on the part of the business and its directors leading to the injury, and most of these actions seek a lump sum payment based on pain, suffering and loss of enjoyment of life. We can provide cover to businesses that provides indemnity for defence costs and damages following these allegations. No business should be without this cover. A quality defence is always important as it is often the reputation of the business that is at stake let alone the potential cost to the business’s balance sheet should a claim be successful.
Statutory Liability
Contract works cover – there is a big difference between the cover provided by different insurers, some providing twice the cover (in the sub-limits) of other insurers for a similar cost, for example the rear townhouse in a 3 unit development was destroyed by street kids who lit a fire on the lounge floor to keep warm, as the site now had 2 partly completed homes in front the demolition costs were far higher than a standard policy allows for Tools of trade – your tools are your livelihood, one change we have seen is the increase in total loss claims where they steal your van with all your tools instead of just breaking in and taking a few items. Some insurers have a $1,000 excess and depreciate the value of tools over 2-3 years old, meaning that a $3,000 claim could result in a $200-$500 payout, others have no depreciation and a $100 excess, meaning a payout of up to $2,900 for the same event.
Management Liability
This is a collection of different policies in one package, there is a big range in the quality and number of covers included between the policies offered by different insurers. Some of the covers that should be included include: Directors & officers’ liability (D&O) – as a director or officer of the company you can be personally liable for errors in the running of the business. Employment disputes – Cover if you are taken for a personal grievance (etc) by an employee, with the increase in awards against employers (on average 4 times what it was just 2 years ago) and the process so stacked in favour of the employee, this is becoming essential cover. Crime – Cover against theft of money (and alike) by employees, this is becoming a bigger issue and always seems to be from the long-standing trusted staff. PR cover – should an event occur, with the help of social media, one person on a mission can now destroy a businesses reputation, getting expert advice on how to deal with the fall out can save your business. Cyber cover – Globally NZ is one of the most targeted countries, for both theft of data or money and ransomware (where you are locked out of your computer system until you pay a ransom) This policy covers your costs to repair the damage, your loss of profits, costs related to notifying affected parties, PR damage and third-party costs.
Directors & Officers Liability
As well as the potential rewards to Directors of companies there is considerable responsibility. Directors of companies are expected to be aware of everything going on within the companies they direct, whether it is part of their “expertise” or “division” or not. The title of Director may carry some weight reputation wise but it also means that the director can be held personally accountable for the status of the company. Some of these accountabilities can be unlimited. Businesses are expected to act in a responsible, lawful manner and directors are put in place to not just administer a company but also to protect those who come into contact with the company. This could be employees, shareholders, creditors and even the general community. Should there be mismanagement of a company the Directors can be sued personally by any of the above but also by such as Government Organisations such as the Serious Fraud Office, the Commerce Commission or the Financial Markets Authority. Those actions can lead to the director’s own financial destruction. Through the Articles and/or Memoranda of Association, many companies are required to indemnify their directors from actions taken against the directors. Defence costs and any potential damages can lead to serious implications for the balance sheet. If the company becomes insolvent following an action indemnifying the director then further actions can be brought by such as receivers as well. We can provide Directors and Officers Liability cover for our clients that provides cover for the individual directors and also the company that is required to indemnify the director. This cover will include Defence Costs, judgements and settlements, appearance costs and investigation costs.
Association liability
As a trustee (or even ex trustee) you can be personally liable for issues that stem from the running of the trust, this means your home might be at risk if something serious goes wrong with the trust
Cafés & Restaurants
Our policy covers all the standard things like plant & stock, but also pays attention to things that tend to be overlooked such as tenant improvements and the fitout which can cost many thousands of dollars. Unlike some other businesses, you can’t just move if the building suffers significant damage. Location, parking & council approvals are important considerations in selecting premises, so it’s imperative that your Business Interruption policy pays out for long enough for council consents, rebuilding and for your turnover to recover. Usually this takes more than the 12 months cover provided by most policies. This is especially true if it’s a major event such as an earthquake where professionals and tradesmen are in short supply.
SMEs/Retailers
Whatever your business we will work with you to determine what are the biggest threats to your business and then develop cost effective insurance solutions to cover those risks. Although at different ends of the age spectrum both types of businesses have similar issues Both require all the standard covers such as plant and equipment insurance, but also have issues different to most other businesses, if you have to close down even for a short period your residents/children will go elsewhere and are unlikely to return once you reopen meaning your financial recovery can take much longer. You have critical staff that you must retain, regardless of your financial situation, which means you need an insurance cover to pay their wages till you are back on your feet. You have more privacy, regulatory and compliance issues to deal with, You are more skeptical to PR damage and have more employment dispute issues than many other businesses and need insurance tailored to your industry rather than an off the shelf insurance policy.
Professional Indemnity
Professional indemnity insurance covers you for errors in the advice or service you provide. With Professional indemnity insurance it is always better to have a policy which was specifically written for your industry, as it includes cover designed for your specific needs, for example IT liability, wet building cover for Architects, or design & construct policies which don’t have the inherent exclusions of standard NZ policies. Through our overseas connections we can access many industry specific policy wordings not seen in NZ. NZ policies tend to have “costs inclusive excess”, where you pay the excess before the insurer pays anything, regardless of the outcome. Some of our insurers provide “costs exclusive excess” policies. With a costs exclusive policy, the insurer in involved & picks up the costs from day 1 and the excess is only paid when a settlement is made, this can make a big difference at claim time.