Manage your insurance policy
Businesses are always changing and growing so don’t leave yourself with insurance cover that isn’t keeping up. Shop around and talk to a number of insurance companies and brokers to discuss what is best for you.
Did you know?
If you're registered for Goods and Services Tax (GST), you may be able to claim GST credits for the GST component of your insurance premium. Find out how you can claim on our GST page.
As the costs and the value of your assets change over time, it’s common for:
- your insurance premium to change over time
- the insurable value of your assets to go down over time.
For this reason, you may need to re-evaluate your insurance policies to make sure that your business has the right cover.
Insurance contracts don't typically compensate businesses for depreciation. Check out these examples:
- Sam buys a car for his business for $40,000. The insurance company agrees to insure his car for $40,000 for one year. His insurer thinks the car's useful life is five years, so they depreciate it at a rate of $8,000 per year. So, his insurer only offers to insure his car for $32,000 in the second year.
- Amanda buys machinery for her business for $220,000. She and her insurer agree to insure it for $200,000 for one year. Her insurer thinks the machinery will wear out and cost $8,000 to remove after 10 years. The insurer depreciates it at a rate of $20,800 per year. In the second year after getting the equipment, Amanda's insurer only offers to insure the equipment for $179,200.
Similarly, most insurers change their offers when market values change. Check out the following examples:
- Stewart's business buys $150,000 of chairs to sell in his store. He insures his stock. After a year, the market value of chairs drops, so now the chairs are only worth $100,000. His insurer only offers to insure his chairs for $100,000.
- Lee buys $1,000,000 worth of bricks for his business to sell and insures them for a value of $1,000,000 for theft. Their market value falls to $900,000, so when Lee's contract comes up for renewal, his insurer only offers to insure his bricks for $900,000.