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Minimising the Risk of Underinsurance


Published with permission from Steadfast.

An increasing number of Kiwis, especially those who own businesses, are discovering they don’t always have the cover they need in the worst possible circumstances.

It can be hard to engage people on the subject of insurance. To help you realise how much you already may know about this important area, try answering the questions about this crucial, but sometimes overlooked, topic, below?


1. What type of insurance can cover you in the event of a natural disaster resulting in your business having to close for a period of time?

2. What type of insurance can offer cover if a client or customer decides to take legal action against me? What industries require mandatory insurance, or it is advised to have this type of


3. What insurance type can offer a payout to cover costs relating to everything from a broken window to a tax audit to employee theft?


1. Business interruption insurance.

2. Professional liability insurance (or professional indemnity insurance). Those working in law, accounting, financial advice, and medical industries often are required to have this cover.

3. Business insurance.

Many businesses don’t know the amount of cover needed

If you didn’t answer all the questions correctly, don’t worry. Many people don’t appreciate all the insurance policies that could be relevant to them. This is why it’s essential for business owners to get advice from an insurance broker, to figure out what cover their existing policies provide should there be an accident, natural disaster or other insurable event.

You get what you pay for

When a business or individual has either, deficient insurance or none at all to cover any legal liabilities, or the cost of loss or damage to their assets, it is called underinsurance and it is becoming a real risk in New Zealand.

“Some small businesses try to save money by minimising the cost of insurance premiums,” says Steadfast’s Neil Cousins. “The rise in online insurance options and price-comparison websites makes it easy to identify the cheapest policy. But usually, the lower the premium, the narrower the cover. Taking the cheap option could mean your policy doesn’t respond when you need it most.”

Even business owners prepared to pay for adequate cover may end up in strife if they don’t regularly review their insurance cover. “So keep your insurance broker up-to-date with important changes to your business, such as hiring new employees or taking on major new clients, to make sure you have the right cover.”

Even if there are no changes to your business, the space you operates in will. One example of this is Cyber security. A Microsoft report discovered, although Kiwi businesses are less likely to be subject of a cyber security threat, with ransomware attacks on Kiwi firms 60% lower than the global average, “businesses and consumers still get stung” (as some hospitals and schools discovered this year).

“Usually the lower the premium, the narrower the cover ”

How a broker helps

In order to have the right cover for your company, no matter what the threat or risk, an insurance broker can help. An insurance broker can tailor a competitively-priced policy to safeguard your business against the major risks faced by your firm, and ensure all insurable risks are covered sufficiently so you can have peace of mind! Not only this, they also help with the claims process so you can rest easy when going through an already stressful situation.

If you want to talk to someone about your current insurance policy, get in touch with the team at High Street Insurance Brokers.

High Street Insurance Brokers