Business Insurance Cost NZ: What Drives the Price of Cover
There is no standard price for business insurance in New Zealand. Each premium is set by the insurer after it looks at what your business does, how much it earns, how many people work in it, the limit you choose, your excess and your claims history. Two businesses that both ask for $2m of public liability can be quoted very different amounts. Any figure you see without those details attached is a guess.
In short
- Price is set by risk. Your trade and activities usually matter more than the size of your business.
- You control four things: the limit, the excess, which covers you take and how accurately you describe the work.
- Price comes from the insurer once your details are underwritten.
What sets the price of business cover
- What the business does, in plain words
- Turnover or wages
- The limit a contract sets
- The excess you choose
- Claims and incidents from recent years
A contract that sets the limit
A $5m limit usually costs more than $1m for the same business.
A service left off the description
Leaving one out can put a later claim at risk.
A cheaper policy with a gap
A lower limit or an exclusion for your main activity can cost more at claim time.
Work out what to raise
Tick what applies to you
- The business is just starting out
Describe the work in plain words, as that shapes the cover and the price.
Covers to raise: Public liability
- My renewal went up
Ask which factor moved: turnover, limit, excess or claims.
Covers to raise: Public liability
- A contract sets the limit
A higher limit generally costs more, though not in a straight line.
Covers to raise: Public liability
- We do trade or construction work
Covers to raise: Public liability, Contract works, Tools and equipment
- We give advice or professional services
Covers to raise: Professional indemnity
- We run a shop, cafe or other premises
Covers to raise: Premises, stock and interruption
- We have staff or subcontractors
Whether subcontractors hold their own cover can change the rating.
Covers to raise: Public liability, Statutory liability
- We work online or hold customer data
Covers to raise: Cyber
What these covers do not pay
- A service you left off the business description, which can put a later claim at risk.
- Work outside the policy wording, whatever the premium.
- Health and safety fines. No premium buys that cover.
- A lower limit or bigger excess does not make a gap in cover disappear. It moves the cost to claim time.
General information only. Whether a cover responds depends on the policy wording.
Which clause is in your contract?
Subcontractor cover
The contract asks that anyone you sub the work to carries their own insurance, or that your policy responds to their work. Insurers often ask how much work you sub out and whether you check your subbies.
Covers to raise: Public liability, Contract works, Statutory liability
What it does not decide: It does not decide whether your policy covers a subcontractor, or whether theirs is enough. Both depend on the wordings and on what you declared.
Who insures the works
The contract says who arranges insurance for the job while it is being built: the client, the head contractor or you. It also shows who holds the risk until handover.
Covers to raise: Contract works, Public liability
What it does not decide: It does not decide whether the policy that exists covers your part, your materials, or your subcontractors. Check who is insured under it and what it leaves out.
Limitation of liability
A cap on what you could owe the client if something goes wrong, often tied to your fees or a set figure. It can also exclude certain losses such as lost profit.
Covers to raise: Professional indemnity, Public liability
What it does not decide: It does not decide what your insurance pays. A cap in the contract may sit below or above your policy limit, and some claims, such as personal injury, may fall outside it.
General information, not legal advice. The full clause and the policy wording decide how it applies.
Check your certificate of currency against the contract
Check the insured name, limit and dates match the contract. The policy wording, not the certificate, decides what is covered. How a certificate of currency works
What each cover may pay, and what it usually does not
Public liability
- May respond to
- Damage to others' property or injury to the public, plus defence costs.
- What moves the price
- Priced on trade, turnover, limit and work at height or on other people's property.
- Usually not covered
- Your own faulty work, your own tools and advice errors.
Professional indemnity
- May respond to
- A claim that your advice or design cost a client money.
- What moves the price
- Priced on type of advice, fees earned, size of jobs and contract terms.
- Usually not covered
- Physical damage to property and claims outside the policy period.
Contract works
- May respond to
- Damage to a project while it is being built, depending on who insures it.
- What moves the price
- Priced on project value, site risks and duration.
- Usually not covered
- Faulty workmanship itself and wear and tear.
Tools and equipment
- May respond to
- Loss or damage to your tools and equipment.
- What moves the price
- Priced on tool value, where they are kept and theft record.
- Usually not covered
- Wear and tear, and some theft from unattended vehicles.
Premises, stock and interruption
- May respond to
- Repair of premises, fit-out and stock, and lost income if you add business interruption.
- What moves the price
- Priced on sum insured and security.
- Usually not covered
- Wear and tear, and a claim reduced if the sum insured is too low.
Cyber
- May respond to
- Costs after a data breach or fraud, depending on the wording.
- What moves the price
- Priced on data held, revenue, security controls and payment handling.
- Usually not covered
- Physical damage to equipment and upgrades to your systems.
If something goes wrong
The renewal jumps
A small contractor's renewal rises after a wage roll increase and a new contract asking for a higher limit.
May respond: Public liability
Have ready
- Last year's and next year's turnover and wages
- The contract clause naming the limit
- The old and new schedules
- Any claims or incidents in recent years
A service missing from the description
A business adds design work but never tells its insurer, and a client later disputes a drawing.
May respond: Professional indemnity
Have ready
- The policy business description
- The date the new service started
- The client contract and drawings
- Emails about the dispute
A cheaper policy with a gap
A tradie picks the lowest premium, then finds the policy excludes work at height.
May respond: Public liability, Contract works
Have ready
- The full policy wording
- A description of the job and the site
- Photos of the damage
- The contract and its insurance clause
Typical examples, not real claims. ACC deals with most injuries, so an injury claim is mostly about property and legal costs. Whether a claim is paid depends on the policy wording and the facts.
Why there is no single price
Business insurance is a set of separate covers, not one product. A cafe might hold public liability, property cover and business interruption. A consultant might hold professional indemnity and cyber. Each is priced on its own risk, then often combined into one package.
We do not publish premium figures here. If you see a "from $X a month" headline, check what limit, excess and trade it assumes.
What moves the price
Not every insurer uses all of these, and the weighting differs.
- What the business does. Usually the biggest factor. Describe your activities properly, because leaving out a service can put a later claim at risk.
- Turnover or wages. Many liability policies are rated on these.
- Staff and subcontractors. Numbers, and whether subcontractors hold their own cover, can change the rating.
- The limit. The most the insurer pays on one claim. Contracts set it for many businesses. Higher limits generally cost more, though not in a straight line, so ask for two limits to see the step.
- The excess. What you pay before the insurer does. A higher excess can lower the premium, but you carry more at claim time.
- Claims history. Insurers ask about recent claims and incidents, including ones you did not claim on.
- Where you work. Premises, location and site type all feed in.
- Sum insured and security. Underinsuring lowers the premium and can leave you short when you claim.
- Which covers you combine. Check that a bundle gives you every cover your contract asks for.
Public liability and price
Public liability is usually the first cover asked for, and it moves with the same factors, your trade most of all: see public liability insurance. A $5m limit usually costs more than $1m for the same business, so a contract asking for $5m moves the number. Construction, roofing and event work sit toward the high end. If a main contractor wants a certificate, see the certificate of currency guide.
What drives each cover
| Cover | What mostly drives the premium |
|---|---|
| Public liability | Trade, turnover, limit, work at height or on other people's property |
| Professional indemnity | Type of advice, fees earned, size of the jobs, contract terms |
| Statutory liability | Industry and regulatory exposure, staff numbers |
| Contract works | Value and type of each project, site risks, duration |
| Tool insurance | Value of tools, where they are kept, theft record |
| Business vehicle | Vehicle value and type, drivers, use, claims history |
| Business interruption | Gross profit, indemnity period, dependence on premises or suppliers |
| Cyber | Data held, revenue, security controls, payment handling |
Health and safety fines cannot be insured in New Zealand (Health and Safety at Work Act 2015, s 29), so no premium buys that. Statutory liability can respond to some defence costs.
How to keep the price fair
Cutting cover to cut cost often backfires.
- Describe the work accurately. It can place you in a better category and protects your claim.
- Start from the contract's limit, then ask what the next limit up would cost.
- Choose an excess you can afford.
- Keep records clean. Safety procedures, maintenance logs and incident records help.
- Review every year, and tell the insurer about changes.
- Do not double up. Check what a package already includes.
What to have ready
Business name, structure and what it does in plain words; turnover and wages for last year and next; staff and subcontractor numbers; any contract insurance clause; claims from the past few years; and values of property, stock, tools and vehicles. For the covers a business like yours starts with, see the business insurance guide, insurance for a new business or the tradie insurance guide.
How we help
A Smiths adviser will phone you to talk through which covers to look at. Some business covers we refer to another licensed Financial Advice Provider, and we will tell you who, and how they are paid, before your details go to that firm. That firm may charge fees. Smiths Insurance & KiwiSaver may receive a commission or referral payment if you buy. Cover and price depend on insurer underwriting and the policy wording. Financial advice is provided by Craig Smith Business Services Limited, trading as Smiths Insurance & KiwiSaver, a licensed Financial Advice Provider (FSP712931).
Use the form at the top of this page. QuoteHub is not an insurer or a broker. The owner's own life and income cover is a separate question, covered under owner protection.
Frequently Asked Questions
How much does business insurance cost in NZ?
It depends on your trade, turnover, staff, limit, excess and claims history, so no single figure is fair. A price only exists once an insurer has underwritten your details.
Why is my business insurance so expensive?
Common causes are high-risk activities, a large turnover or wage roll, a high limit set by a contract, a low excess, or past claims. Ask what changes if you adjust the limit or excess.
Is business insurance tax deductible in NZ?
Many premiums are deductible, but it depends on the cover and your circumstances. Check with your accountant or Inland Revenue. Life and key person cover has its own rules, see tax on business life cover.
Is the lowest premium enough?
Not always. A policy that costs less but has a lower limit, a larger excess or an exclusion for your main activity can cost far more at claim time. Read the wording as well as the premium.
Does ACC replace business insurance?
No. ACC deals with personal injury, not property damage or your legal costs. See ACC vs private insurance.
References
- Health and Safety at Work Act 2015, s 29 (legislation.govt.nz)
- Accident Compensation Act 2001 (legislation.govt.nz)
- Insurance Council of New Zealand (ICNZ)
- Inland Revenue
Related industries
Protect the people behind the business
Liability cover protects the business from claims. If you or a business partner could not work, or died, key person and shareholder cover can help keep the business, and your family, going.
- Key person cover, if the business relies on you
- Shareholder cover, so partners can buy each other out
- Income protection for owners and the self-employed
Get the details an insurer will ask for
Tell us what the business does, roughly what it turns over and any limit your contract asks for. A licensed Smiths adviser phones you. If we refer you to another licensed firm, we tell you who first. Smiths Insurance & KiwiSaver may receive a commission or referral payment if you buy.
A licensed Smiths adviser phones you. If we refer you to another licensed firm we tell you who first and how they are paid.
Read the full insurance guides
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