5 COMMON BUSINESS INSURANCE MISTAKES

Buying the cheapest insurance cover doesn’t necessarily mean it's the right insurance for a small to medium business in New Zealand.

A 2022 Deloitte study of 5,300 small and medium businesses across 14 countries found that price is perceived to be the number one driver when purchasing insurance. However, business leaders also placed trust in the insurer, good customer service, claims service and flexibility in the payment structure as important factors when making a decision on cover.

I find many business owners in Canterbury are increasingly looking online for cover and this could be a costly mistake. The last thing you want to do is under insure your business and find a claim is rejected because you weren’t aware that the policy you purchased didn’t provide the right cover. Ask yourself, did you read all the terms and conditions of that policy and really understand it? If the answer is no, then a broker will be able to help. 

I definitely encourage potential clients to do some research to get an understanding of what they think they need before we talk or meet face to face. It's going to help you to ask the right questions. It comes back to that Deloitte survey. Small and medium businesses (SMEs) put a lot of trust in the insurer they choose alongside price. A broker can ensure you get both of these because we’re not working for anyone, we’re working for you. Which leads me to probably the most common mistake businesses make when it comes to insurance. Misunderstanding a broker’s role. 

Why do I need an insurance broker? The myth around an insurance broker is that they just provide you with quotes from insurers they are ‘in bed’ with and that’s it. Once the deal is done they walk away with a tidy commission and you’re on your own. It’s not surprising that there’s a strong correlation between SMEs getting information via an insurance broker and having positive claims experiences. A Vero Insurance study of 900 small business owners and insurance decision makers found that 69% of SMEs who said they were happy with their claims experience, also were satisfied with their broker. While 82% of those businesses surveyed who reported a high claim outcome also said they had a good collaboration relationship with their broker. 

Over time, your business grows and evolves, so too do your insurance needs and this is where having a broker can help. We are there to ensure your insurance over time adapts to change both in your business and from any market or industry changes. It’s my job to make sure I am up to speed with changes to your business activities and government regulations that could impact your cover. Without a broker, failing to update business insurance could prove costly. 

I know you’re busy running your business. I can come and see you or we can schedule a discussion on the phone and talk about your insurance needs. And there’s no obligation to use myself or Rothbury. However, my clients enjoy the way I communicate and really get to know their business needs in depth. I’ve had more than 20 years having these conversations with many business owners both here in Canterbury, across the country and overseas. Business owners often think a broker is working for the insurer, that couldn’t be further from the truth - I’m working for you. And I am looking for the broadest, most inexpensive cover for what you care about and what you need.  Once you decide to go with me, then we’re a team - I am your personal insurance broker with dedicated back office support and there to help if there is an issue. You won’t get that from an online, off-the-shelf policy. 

Misunderstanding the types of insurance cover. One common mistake some businesses make is not understanding the complexities around different types of liability insurance. An example of this is public liability and professional indemnity insurance. They sound similar but are completely different in the protection provided and choosing the wrong one could mean you are paying too much or aren’t covered if a mistake or fault occurs. What does your business need? 

Imagine you’re running a Christchurch engineering business and one of your trucks you own drives onto your property and knocks over a large tree. It topples on to your neighbour’s property, causing damage to their retail operations and significant damage to two vehicles parked in their driveway. Public liability insurance might cover you from the cost of the compensation claims for damage to their property. 

Okay now imagine one of your engineers has designed and installed the wrong piece of equipment at a client’s factory causing significant damage and subsequent delays to the manufacturing plant. Is this covered by public liability or professional indemnity insurance? 

I’m here to answer these questions and more, and make sure you have the right level of cover. 

It’s too complicated to change insurers & use a broker. I’m commonly asked questions around the process of engaging a broker for business insurance. It surprises me but I get it. Often the perception is that it’s too hard, very complex or just a hassle - especially if you already have insurance. Actually it’s very easy. If you have insurance in place, then I can give you a handy like-for-like comparison on cover for your business, with specific advice and recommendations for improvements. 

Complaints around business insurance generally stem from the fact that policies just get rolled over year to year without any input from the company handling the policy. My approach is to ensure I come back to you well before renewal to check-in. Has anything changed in your business? Are there changes in the market or specific to your industry that may affect your insurance? I ensure everything is presented to you before  a renewal takes place. 

Businesses engage a broker too late. This can be frustrating for not only the broker and their team but you as well. As a broker I don’t set the price, I negotiate it, which means a bit of time is needed to negotiate with multiple insurers. Five working days is usually needed to turnaround the very best deal. I had a builder client approach me for contract works insurance recently. He needed a quote the next day because the construction site was already cleared and ready for the foundation to be poured. That’s a tough turnaround with very little leverage for negotiations. Two to four weeks is a good timeframe for any business that has more than just a few vehicles and tools to insure. Don’t leave it until your renewal date tomorrow to start engaging a broker. Do it now. At Rothbury we cater for everyone; from startups, sole traders and SMEs to professional firms and established businesses.I’m working across the Canterbury region and beyond. Let’s chat.