Business Insurance: Protect Your Business from Risks

Published Monday 26 January 2026

Table of contents

• Essential types of business insurance
• Industry-specific insurance considerations
• How to choose the right business insurance
• Reviewing your business insurance coverage
• Protecting your business beyond insurance
• Keep your finances protected and organised
• FAQs on business insurance

Key takeaways

• Assess your specific business risks by listing potential financial threats, then prioritise essential coverage like property insurance for physical assets and public liability insurance for customer interactions.
• Review your business insurance coverage annually and after major changes such as hiring staff, purchasing equipment, expanding locations, or adding new services to ensure adequate protection.
• Combine business continuity planning with insurance coverage to create comprehensive protection, as insurance covers financial losses while continuity planning maintains operations during disruptions.
• Consult trusted advisers including accountants, other business owners, and lenders before speaking with brokers to get unbiased guidance on coverage levels that balance protection against premium costs.

Essential types of business insurance

Every business faces different risks, but some types of insurance are fundamental for protecting your hard work. Here are the most common types of cover to consider.

1. Property insurance

Property insurance protects your business buildings and contents from damage or loss. This coverage safeguards your physical assets against:

• Fire damage: Covers building repairs and equipment replacement
• Theft protection: Replaces stolen inventory, equipment, and fixtures
• Natural disasters: Provides coverage for weather-related damage. Regulations require New Zealand insurers to hold enough capital to cover a one in 1,000 year catastrophe event.
• Vandalism coverage: Repairs damage from break-ins or vandalism

Most small businesses keep their key assets in one location, making this essential protection.

2. Vehicle insurance

Business vehicle insurance covers company cars, trucks, and commercial vehicles against damage and liability. Essential coverage includes:

• Accident damage: Repairs or replacement after collisions
• Theft protection: Full vehicle replacement if stolen
• Injury coverage: Medical expenses for drivers and passengers
• Third-party liability: Legal protection against lawsuits from other drivers

This applies to any vehicle used for business purposes, even if it's your personal car.

3. Public liability insurance

Public liability insurance protects your business when you accidentally harm others or damage their property. Coverage includes:

• Property damage: When your business damages someone else's belongings
• Personal injury: If a customer or visitor gets hurt on your premises
• Product liability: Harm caused by products you sell or services you provide
• Legal costs: Court fees and compensation payments
• Punitive damages: Additional penalties ordered by courts

This is often legally required for businesses that interact with the public.

4. Professional liability insurance

Professional liability insurance covers financial losses when your professional advice or services cause client harm, with this area being governed by a new financial advice regime that came into force in March 2021. This protection addresses:

• Professional errors: Mistakes in advice or service delivery
• Negligence claims: When clients suffer losses from your oversight
• Legal defence costs: Lawyer fees and court expenses
• Settlement payments: Compensation awarded to affected clients

Professional liability insurance is required for professionals including:

• Accountants and bookkeepers
• Lawyers and consultants
• Medical practitioners
• Engineers and architects
• Financial advisors

5. Cyber insurance

Cyber attacks are a growing threat for businesses of all sizes. The New Zealand government recommends that you consider cyber insurance as part of your risk management strategy.

Cyber insurance can help cover the costs of dealing with a data breach or hack, including data recovery, customer notification, and credit monitoring services.

6. Business interruption insurance

Business interruption insurance replaces lost income when you can't operate normally due to covered events. This insurance activates when:

• Natural disasters: Floods, fires, or storms damage your premises
• Supplier failures: Key suppliers can't deliver essential materials
• Utility outages: Extended power, water, or internet disruptions
• Government orders: Mandatory closures or restrictions

Coverage provides:

• Lost revenue replacement: Maintains cash flow during closures
• Fixed cost coverage: Continues paying rent, loans, and salaries
• Recovery expenses: Funds to restart operations quickly

Industry-specific insurance considerations

The right insurance depends on what you do. A tradie has different risks than a retailer or a consultant. For example, tradies might need cover for their tools and public liability on-site, while a professional service business will focus on professional liability.

Think about the specific risks in your industry and talk to an adviser to find the right fit.

How to choose the right business insurance

Choose business insurance coverage by following these steps:

1. Assess your risks: List what could damage your business financially
2. Calculate potential losses: Estimate costs of property damage, lawsuits, and business interruption
3. Consult trusted advisers: Speak with accountants, other business owners, and lenders like ASB before brokers
4. Compare coverage levels: Balance adequate protection against premium costs
5. Review policy details: Ensure coverage matches your specific business risks, noting that recent government reforms help protect consumers from unfair contract terms in insurance policies.

Getting the right level of insurance protects you from major losses and helps you avoid paying for cover you do not need. Getting advice from experienced business contacts helps you find the right balance.

Reviewing your business insurance coverage

Review your business insurance coverage when these changes occur:

• Annual policy renewal: Compare rates and coverage options
• Business growth: Revenue increases or new locations
• Structure changes: Moving from sole trader to company
• New services: Adding different products or service lines
• Staff changes: Hiring employees or engaging contractors
• Asset purchases: Buying expensive equipment or vehicles

Schedule reviews every 12 months or after major business changes, and be aware of upcoming shifts in insurance law, as significant changes will take effect in 2027. This ensures your coverage matches current risks and you're not paying for unnecessary protection.

Protecting your business beyond insurance

Business continuity planning prepares you to maintain operations during disruptions, while insurance provides financial protection. A complete risk management approach includes:

Continuity planning covers:

• Emergency procedures: Steps to take during crises
• Backup systems: Alternative suppliers and locations
• Communication plans: How to reach staff and customers
• Recovery timelines: Getting back to normal operations

Insurance covers:

• Financial losses: Lost income and extra expenses
• Legal protection: Lawsuit costs and settlements
• Asset replacement: Damaged equipment and property

Together, these strategies help your business survive and recover from unexpected events.

Download our free business continuity plan template.

Keep your finances protected and organised

Choosing the right insurance is a key step in protecting your business. Just as important is keeping your financial records in order so you can manage costs and make informed decisions. With clear visibility of your finances, you can better prepare for the unexpected.

See how you can run your business with more confidence. Try Xero for free.

FAQs on business insurance

Here are answers to some common questions about business insurance.

What is the best business insurance for a small business?

The best insurance for you depends on your industry, business size, and specific risks. A good starting point is a package that includes public liability and property insurance, then add other types of cover as needed.

What does business insurance typically include?

A typical business insurance package covers risks like damage to your property or stock, and legal costs if someone makes a claim against you (liability). You can tailor it to include vehicle, cyber, business interruption, and other specific types of cover.

Do I need business insurance if I work from home?

Yes, it is a good idea. Most home and contents policies only cover personal activities, equipment, and liability, so you may need separate cover for your business. A home business policy can protect your work assets and cover you if a client is injured at your home.

How much does business insurance cost in New Zealand?

The cost varies widely based on your industry, revenue, number of employees, and the types and amount of cover you choose. It's best to get quotes from a few providers to compare prices for the protection you need.

When should I review my business insurance coverage?

You should review your insurance at least once a year, or whenever your business changes significantly. This includes hiring new staff, buying major assets, moving premises, or offering new products or services.