The Hidden Cost of Underinsurance in NZ.
Real stories of New Zealand businesses facing underinsurance challenges & learn how to protect your enterprise.
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"We thought we had enough cover," are words no business owner wants to utter after disaster strikes.
Yet, underinsurance remains one of the most overlooked threats facing New Zealand businesses today. It's a silent, expensive mistake that only becomes apparent when it's too late.
At InPlace, we've worked alongside hundreds of Kiwi businesses, navigating insurance intricacies to avoid these costly errors. Today, let's explore five real-life scenarios where local businesses discovered the true cost of inadequate coverage—and what you can learn from their stories.
01
The Queenstown Café That Couldn't Rebuild
When flooding hit Queenstown in 2023, one popular café owner assumed his insurance would fully cover repairs and lost income. However, his business interruption coverage was only set to last three months. With extensive delays in building consents and reconstruction, he needed at least 12 months of cover. This left him significantly out-of-pocket and ultimately forced the café to shut down.
Lesson: Always assess realistic timelines for potential interruptions, including council delays. Regularly review business interruption periods to match your actual risk.
02
The Christchurch Tech Firm and Key Person Loss
A growing tech startup in Christchurch relied heavily on its brilliant CTO. When she suddenly became critically ill, the business realised too late that it had no key person or trauma insurance in place. Recruitment and training of a new senior leader cost tens of thousands, plus months of stalled progress. The financial strain nearly halted their expansion.
Lesson: Key person and trauma insurance isn't a luxury—it's an essential safeguard for businesses reliant on specialist skills.
03
Auckland Retailer: Caught Short After Cyclone Gabrielle
An Auckland-based clothing retailer insured their stock at purchase cost, not replacement value. Post-cyclone flooding destroyed their inventory, and skyrocketing wholesale costs meant the payout covered barely half the replacement expense. Their finances never recovered.
Lesson: Regularly update your asset values and insurance policies, factoring in inflation and rising supply chain costs to avoid dangerous coverage gaps.
Adrian Yamunanathan
“Sometimes the best thing we can do is ask the right questions before a problem becomes a story. Let’s look at it together.”
04
The Hamilton Manufacturer’s Liability Nightmare
A machinery malfunction at a Hamilton manufacturing company led to severe injuries to a worker. The business held basic liability cover but lacked employers' liability insurance, assuming ACC would handle everything. Unexpected legal costs and compensation beyond ACC coverage drained their reserves, severely impacting cash flow and reputation.
Lesson: Employers' liability coverage fills critical gaps ACC leaves open. Always double-check that your business is fully protected against workplace risks.
05
Wellington Consultant: Cybercrime Costs Mounting
A small Wellington consultancy dismissed cyber insurance as unnecessary. When hackers hit their systems with ransomware, the consultancy faced hefty IT recovery costs, lost clients, and reputational damage. Without cyber coverage, the full brunt of expenses fell directly on the business, forcing severe cutbacks.
Lesson: Cyber insurance isn't just for large companies. Digital risks are universal, making cyber protection crucial for businesses of all sizes.
How to Ensure Your Business Isn’t Underinsured
Learning from these stories, here’s how to proactively avoid underinsurance:
Regular Risk Audits: Conduct thorough annual audits of your insurance needs—especially when your business grows or changes.
Realistic Coverage Limits: Always opt for realistic and forward-looking coverage limits. Short-term savings on premiums often lead to massive long-term losses.
Consult Experts: Work closely with experienced insurance advisors who truly understand the unique risks of your business and industry.
Still not 100% sure you're covered where it counts?
Most business owners aren't. And the truth is, it’s not your job to figure it all out alone.
Book a free, 1:1 cover check with Adrian — no pressure, no jargon, just a real conversation about where you're exposed, what matters most, and how to protect it.
If you’re unsure whether your current cover is truly fit for purpose, you’re not alone — and we can help.