A complete guide to business contents insurance
Business contents insurance is an extremely important part of any business insurance package. If you have insufficient or no contents insurance, you could end up facing significant bills in the event of an accident or catastrophic event at your business premises; however, you could also end up out of pocket if you pay too much for your business contents insurance by overestimating the amount of insurance you need. This guide will show you how to calculate your business contents insurance and find the best deal for you as a New Zealand business owner.
What is business contents insurance?
Business contents insurance is a type of insurance that covers all the property owned by your business that isn’t bricks and mortar if it gets damaged, lost, or stolen. Examples of items that might be covered by business contents insurance are laptops, office furniture and sound equipment. If you don’t have sufficient business contents insurance, you could be forced to replace these items out of your own pocket in the event of fires, burglaries, extreme weather events and so forth. If you would like more information about contents insurance, visit our website
Types of business contents insurance
There are three types of business contents insurance you can buy:
Unlimited sum insured: This type of policy covers all the contents of your business that are not regarded as a fixed part of your premises without any limits on the amount payable. This type of policy more or less guarantees that everything you have will be fully covered in the event of a catastrophic occurrence.
Sum insured: With this type of policy, the insured person supplies the insurance company with a list of the goods that they want to be insured; the value of these goods will be assessed and that will be the maximum sum payable if a claim is made.
Room rated: This type of insurance is calculated not on a list of contents but on the size of your premises. The advantage of these types of policies is that the insurer makes the calculation about the quantity of insurance needed. Nevertheless, if you take out this type of policy you will have to calculate the replacement cost of all the items that you could lose in a catastrophic event and check that you have sufficient coverage for their replacement.
How much cover do you need?
A good rule of thumb is to think about what you would be doing if you moved your business to new premises. Contents insurance ought to be able to cover everything that you would carry with you from your current premises to a new one. If you don’t have the unlimited cover or a room-rated policy, there are two ways in which you could calculate the amount of cover you need.
First of all, you can take an inventory of all your content and calculate the cost of replacing them at today’s prices; alternatively, there are a number of online content calculators available into which you can enter your possessions to come up with a figure for the amount of insurance required. You should remember that certain items may be assessed on the grounds that they are subject to wear and tear, for example, employee uniforms.
Insurance for valuable items
Different insurers have a definition of what a valuable item is, and so you need to check with your particular insurer to see what is the maximum they will pay on one single item. The average amount for the majority of contents policies is NZ$2000 on an individual item, but some can pay up to NZ$18,000. If you try to claim on a valuable item that is above the insurer’s limit, not only will you not get the full value of the item, the insurer may refuse to pay at all.
This is because if you have a very expensive item, e.g., a laptop worth NZ$5000, your insurer will say that this made the likelihood of it being stolen higher and that you should have informed them that you owned such an item and paid an additional premium to have it insured. This means that it is important for you to make sure you have informed your insurer of any items of this type.
Portable devices
In the modern age, most businesses are heavily reliant on portable IT devices such as smartphones, laptops and so forth. These devices will often travel around with the business owner or employees, making the likelihood of them being broken or stolen much greater. Most policies will cover replacement costs for these devices, but you should check whether your cover extends to what is on the device, for example, any software that you might have downloaded or business records that you could suffer losses from if you lose.
Additionally, you might want to consider what customer information you are keeping on these devices and whether you want to be indemnified against such data being improperly exploited by anyone who obtains the device.
Different insurers have a wide variety of conditions related to the types of coverage they will provide: some might not cover accidental damage, some might not cover theft of certain highly portable items, and so on. Check with your company or your insurance agent that you have the level of cover you require.
Avoid underinsurance
No matter what the value of your contents, make sure that you have them fully insured, otherwise, you might find that you receive a reduced payout in the event of a claim even if you are not claiming the full amount insured. For example, if you have NZ$30,000 worth of computer equipment but you have only insured it for NZ$15,000 if NZ$10,000’s worth of equipment is stolen the insurer will only pay you NZ$5000 on the basis that you are only insured for half the amount so you only get half your claim.
Types of contents insurance cover
There are two different forms of contents insurance cover:
Indemnity cover: This type of insurance only covers the actual value of the goods you have insured at the time they were lost, stolen or broken, e.g., you might have a laptop that you paid NZ$5000 for two years ago, but due to depreciation it is only worth NZ$1000 at secondhand prices. In this case, with indemnity cover, NZ$1000 is all you will receive.
New for old: This is the more usual type of cover, in which the insurer will pay for the replacement of your lost, stolen or broken item with a new one. If an exact replacement is not available, e.g., you have made a claim for a laptop that is not made anymore, the insurer will pay the cost of the nearest equivalent currently available model.
Hopefully all of the above will be helpful to you as you search for a contents insurance policy that will give you the peace of mind you need when you are dealing with the complexities of running your own business. Also, visit the right news network for more news and stories.
