Your business’s biggest asset isn’t its premises, its vehicles or tools, or even its customer list. Your business’s biggest asset is its ability to generate revenue. And, if the worst-case scenario happens and your business can’t operate for a few weeks or longer, then your ability to generate revenue will be severely impacted.
It’s essential to manage this risk so that you can have peace of mind that your business will be able to operate reliably. A good way to start would be to take stock of your business and understand what it needs to be able to operate.
Here are some examples of the types of risks that businesses can face:
Your business may be well and truly able to operate without premises; your staff could work from home or they may be on the road most of the time anyway. For other businesses, this may be unthinkable. If that’s the case for your business, then it’s important to consider commercial property insurance. This can protect you if your premises are damaged due to factors such as fires or floods, depending on the policy you choose.
Most businesses would be unable to operate if their tools of the trade were stolen or damaged. This includes everything from drills and hammers to mobile phones and laptops. So, the next step is to determine what level of risk your business can sustain when it comes to tools, then ensure your tools are adequately insured through commercial property and asset insurance.
Some businesses have invested considerable amounts of capital in valuable inventory, while others sell services and have no physical inventory. If you have physical inventory then you need to consider the risk of that inventory becoming damaged or stolen. Your inventory could become spoiled if there is an electricity blackout and your refrigerators stop working, or there is a motor burnout and your cool room is no longer cool. If you have specialist equipment to store inventory such as wine under optimal conditions, then it’s crucial to ensure you’re insured in case anything goes wrong with that equipment.
The cost of injuries due to accidents tends to be covered by New Zealand’s accident compensation scheme, ACC, so it’s unlikely you’ll be out of pocket for medical expenses incurred if your staff members injure themselves at work, for example. However, what happens if a key staff member is injured for an extended period of time and can’t carry their weight in the business? It’s important to understand just how integral that person is to your business and, if the business can’t carry on without them, consider key person insurance. This insurance works like life insurance, providing surety in case that person is no longer able to work in the business.
Depending on the nature of your business, you may face unique and significant risks that aren’t automatically accounted for in most corporate and commercial insurance packages.
What to do next
Once you’ve made a comprehensive list of all the potential risks your business could face, along with the worst-case scenario costs associated with those risks, it’s important to find an insurance expert who can help you make sure you get the optimal policies that will cover you for those risks.
If, like most businesses, you don’t have an unlimited budget for insurance, you may need to prioritise your risks. It’s important to get insurance for the risks that are most likely to affect your business. You may determine that there are some risks you can mitigate through different systems and processes, while others are so unlikely that it doesn’t make good business sense to insure for them.
Ideally, you should get the maximum amount of insurance you can afford, and make sure your policy covers your specific requirements. Doing so means working with a trusted advisor whose focus is on helping you mitigate risks throughout your business, as well as on finding you the right insurance package to meet your needs.
For expert advice that’s tailored to your business, talk to an NZbrokers member today.