Is your business protected?

When you think of protecting your business, the first thing that comes to mind is probably insurance. Insurance comes in many forms — from insurance policies for various aspects of your business to making good decisions about staffing and following tried and true business practices.

Many small businesses don’t have a plan for what to do when the unexpected happens — a disaster recovery plan or business continuity plan. It pays to think about how you’d be affected if the worst happened. We can learn a lot from other businesses that have been affected by unexpected events in New Zealand, so it’s important to put procedures in place.

Have you got a back-up for your IT and data? Consider regular external disk back-ups that you keep offsite or storage in the cloud.

Would your people be well set up to work remotely if needed? Get them thinking about how they’d do this if needed.

Think about what would happen if a key person became ill or was unable to travel to the worksite. Do you have other people in the team who can step in if needed? Knowledge transfer to the team as part of staff development and keeping good briefing notes on projects will help other team members to feel comfortable stepping in.

Business insurance focuses on keeping your business running, and making sure you’re compensated for lost revenue if the unexpected were to happen. But what kind of insurance do you need? One size doesn’t fit all. The type and level of cover you need depends on your business.

If you’re a consultancy business, you might insure against potential liability arising from the advice you give to clients or insuring against losing a key person to illness or an accident.

If you’re a manufacturing business, you need to think about insuring your plant and stock so you can continue to make your products.

If you’re a self-employed tradesperson, you’ll probably insure not only your tools, but also your ability to earn by having income protection.

Here are some of the main types of business insurance.

Business asset insurance covers against the risk of accidental loss or damage to physical assets. Your assets are, for example, your property or buildings, machinery, materials, stock, tools, fixtures and fittings, office equipment and other contents.

If something happens to stop your physical business operating as normal – for example, a fire or a flood – the consequences could be significant. Business interruption insurance (also called business continuity) can help protect you by compensating for things like staff wages and lost income while your business is unable to operate normally. It may also cover the extra costs in keeping your business running (for example, if you need to bring in generators for power or find temporary premises).

Business asset insurance covers against the risk of accidental loss or damage to physical assets. Your assets are, for example, your property or buildings, machinery, materials, stock, tools, fixtures and fittings, office equipment and other contents.

Depending on your business type, you can insure against many different types of liability, including:

• Public liability — if you or your staff cause accidental damage to someone else’s property; for example, if one of your employees accidentally damages someone else’s property while trimming trees.
• Professional indemnity — if something goes wrong as a result of professional advice, services or designs you provide; for example, if you design a product that breaches copyright.
• Statutory liability — if you unintentionally breach an Act of Parliament covered by the policy; for example, if you’re found to be in breach of the Fair Trading Act 1986 or the Resource Management Act 1991.
• Employer’s liability — cover for accidents and illness to your employees that aren’t covered by ACC; for example, reparation costs you are required to make to an injured employee.

Insuring against loss of, damage to, or damage caused by your vehicles is important where vehicles are key to the smooth running of your business.

This type of insurance protects against the impact of you or key staff members being unable to work. For example, it could cover the cost of employing replacement cover if you were unable to work due to illness or injury. Or it could compensate the business for the loss of a staff member with critical business expertise or relationships if they suffered illness or injury.

Ransomware and protection of customer information are a real threat to businesses big or small. Traditional insurance policies may not respond to many of the risks associated with virtual assets and liabilities. With more and more business being done through the internet or using cloud technology, hacking and viruses have become a real threat. Cyber insurance cover may also include help from tech specialists if your business is ever hit with a virus or ransomware.

You’ll find a range of options to cover specific risks. For example, if your business is highly dependent on machinery, you can get machinery breakdown insurance to ensure that if anything goes wrong, your machinery can be repaired or replaced, and your business can be back up and running as soon as possible. Or if you’re a property developer, you may want to take out contract works insurance to protect against problems or issues during construction.

You won’t find any hard and fast rules about how much insurance cover you need for your business. Lenders, customers, or legislation may require you to have certain insurance cover, but apart from that; it’s up to you.

Take the time to carefully think through the risks your business faces, and assess the impact on your business if any or all of them occurred. Insurance has a key role to play in mitigating those risks.

When taking out insurance cover, you also need to understand exactly what is not covered by the policy. Don’t wait till something goes wrong to find out what’s not covered — make sure you read the policy documents and ask questions.

Keep an eye on your cover and change it when your risks or other aspects of your business change. It’s a good idea to review your cover at least once a year. By working with our insurance partners we can provide you with a comprehensive insurance package specifically designed to meet the needs of your business. You can talk to a local ANZ Business Specialist about your business insurance needs.

Could another company start selling your information as if it was their own? You may have more intellectual property (IP) than you realise. Your original start-up idea and products or resources you develop are worth protecting.

Include IP clauses in contracts and employment agreements. Assert your copyright over content you create (or choose Creative Commons if you prefer). A specialist intellectual property expert can help you assess the risk in this area and advise whether you need to seek patents, registrations, or trademarks.

Many businesses share content in return for newsletter sign-ups or to encourage further enquiries. But make sure you ask to be credited when your content is used. And equally make sure your business does the same for others.

Choose your staff carefully and sign a clear employment agreement so that both parties know where they stand. Consider including clauses about what happens when they leave — many agreements include restraint of trade for a time after leaving. You need to keep any restraint clause reasonable and appropriate. You can’t prevent someone from earning a living if they leave your business. Get your lawyer’s advice to be sure you have workable clauses.

It might feel odd to talk about things like setting up a competing business and poaching clients when you’re at the beginning of a new relationship. But you’ll avoid potential problems later.