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Business Insurance

Understanding insurance for a family business

Young woman in her studio New Zealand

As a family business, you have enough to worry about as it is. Between the day to day operations and the occasional family politics, it can be challenging to find time to consider why insurance for your business is important and what options are available to you. However, getting your insurance ducks in a row can be vital, as we’re sure you want the best for your family business. After all, your name may be on the line!

But where do you even start? Is there a difference between commercial insurance and small business insurance? And how does business insurance affect your business continuity or succession plan? Just like all families come in different shapes and sizes, it’s the same for insurance. In this guide, we’ll help you understand insurance for a family business, so you can make smarter decisions that are future-focused.

Let’s get started!


What is a family business?

It may seem like a straightforward question, but what technically constitutes a family business? Although there is no strict legal definition, a family business is usually where two or more family members are involved, and the majority of ownership lies within the family. Multiple generations of a family may influence decision making. Family relations that can impact business decisions include:

  • Blood relation
  • Marriage
  • Adoption

A family business also doesn’t need to be small. Some examples of larger family businesses include Volkswagen Group and Samsung Group.


Why is insurance important for your family business?

Any disruption to your business can mean bad news and high cost; I’m sure we don’t need to remind you. If something happens to you or a key person within the business, it might cause a big headache. It can be helpful to ask yourself, what could go wrong with your business? And then, are you prepared for that? It may be beneficial to consider all the risks to your family business regarding your:

  • Premise
  • Particular industry
  • Equipment
  • Staff
  • Intellectual property

Planning for the future of your family business certainly shouldn’t be all doom and gloom. But considering business insurance now can help you enjoy work knowing your legacy is protected.


How can insurance set up the next generation?

One of the significant benefits of being part of a family business is often knowing that the next generation will carry the torch for your business.  You want the best for them not just because you want the business to succeed, but also because they’re whānau and you care. Setting up business insurance and a business continuity plan or succession plan can equip them with the tools to do well.


Does working in a family business affect your premiums?

Short answer; no. There is no favouritism from an insurer whether you’re part of a family business or not. The difference is more to do with ownership and shares. Being a family business may affect your business continuity plan or succession plan as there are family ties to be considered.

What cover options are available for a family business?


There are various insurance cover options depending on the size of your family business and the industry you operate in. Here are Chubb Life Insurance cover options that could help protect your family business.

1. Life Cover

If you or a key person within your business passed away or is diagnosed with a terminal illness, Life Cover can pay you a lump sum. Life Cover may help provide peace of mind knowing your family business can keep running smoothly during big change. 

2. Trauma Cover

If you or a key person suffers from a serious illness or condition specified within the cover, Trauma Cover can pay you a lump sum. Trauma Cover can help minimise the financial impact of this person being out of action.

3. Business Overheads Cover

If you have a disability due to an illness or injury, Business Overheads Cover can make monthly payments to help cover eligible business overheads. Business Overheads Cover can assist with fixed costs like rent, power, or vehicle expenses.

4. Key Person Start-Up Cover

Key Person Start-Up Cover can pay a monthly benefit to make up for any losses if you or a key person could not work due to becoming disabled. This particular cover is targeted to help protect new small businesses. 

5. Accelerated Complete Disablement Cover

If you or a key person within your business, unfortunately, becomes completely disabled due to an illness or injury, Accelerated Complete Disablement Cover can pay you a lump sum. This can help your business keep going or give you funds to get out of the company.

6. Specific Injury Cover

Once again, this is cover that affects you or a key person within your business. If said person suffers from one of the specified injuries within their cover due to an accident, Specific Injury Cover can pay a lump sum. This cover may be beneficial for injuries that ACC may deem as minor. 

7. Premium Cover

If you or a key person within the business cannot work due to being disabled, Premium Cover can pay your total insurance premiums. This payment will be for the entire time you are on claim.

Which cover is best suited for your industry?

No two family businesses are the same. Whether running a sheep and beef farm or an accounting firm, choosing the best-suited cover for your particular industry can be vital. Choosing cover wisely may help ensure that your unique needs are met and that you’re not paying for cover that you don’t need. Here are the Chubb Life Insurance options that are available to your business.

1. Agribusiness Extra

As the name hints, Agribusiness Extra is designed to meet the specific needs of businesses that operate within the agricultural sector. The cover options included with Agribusiness Extra are:

  • Life Cover
  • Premium Cover
  • Accelerated Complete Disablement Cover
  • Accelerated Trauma Cover
  • Disability Cover
  • Income Cover (Agreed Value)
  • Specific Injury

Agribusiness is usually best suited for farmers.


2. Business Assurance

Should the unexpected happen, Business Assurance is comprehensive insurance that offers a range of payment options. The cover options included with Business Assurance are:

  • Accelerated Complete Disablement Cover
  • Life Cover
  • Premium Cover
  • Key Person Start-up Cover
  • Business Overheads Cover
  • Accelerated Trauma Cover
  • Specific Injury

Business Assurance can be suited for all types of businesses.

3. Business Extra

Business Extra is a truly flexible answer to business insurance. Covering consequences and not just events makes this Chubb Life’s flagship business insurance model. Key features that come with Business Extra include:


  • Monthly payments
  • Optional partial payments should you be able to work at a limited capacity
  • Lump sum payments
  • Client benefits such as Counselling services, fitness and nutrition advice, addiction services and general advice to do with finances, legal matters or your career

Business Extra can be ideal for new and smaller businesses. If you’re unsure which insurance cover options are best for your unique family business, it may be helpful to talk with an Independent Insurance Adviser. Read our guide with tips on how to pick an Insurance Adviser.

How to plan your estate if you pass away?

It’s never nice to consider what would happen to your family business if you were to pass away. In saying that, it can be important to make an estate plan for if the unfortunate ever happens. An estate plan can include covering a will, choosing a power of attorney, and considering the best ownership strategy for your shares. Talking with a lawyer when planning your estate can be best, but here are some thought starters.

1. Make a will

We all know what a will is. But when it comes to your family business, a will can be an opportunity to specify who will take over running your business and the direction you hope the company goes in the future. Although these instructions would not be legally binding, they can help with the administration of your estate. You can also specify details for the transfer of your shares. There are helpful online resources available to consider your will before speaking with a lawyer.

2. Pick an enduring power of attorney

An enduring power of attorney is a document that gives the person you’ve specified the power to act on your behalf if you lost the ability to make decisions yourself. You can pick an enduring power of attorney to make choices about your money and property, and another that deals with your personal care and welfare. When considering your family business, a money EPA can be particularly important. Although, it’s recommended to have both

3. Set up a business succession plan

A business succession plan can be critical to ensuring the success of your family business should something happen to you. It’s an in-depth plan about what would happen to our business that, unlike the instructions on your will, is legally binding. Before talking to a lawyer, you can consider how your business succession plan may look with online resources.

Top tip: A business succession plan and business continuity plan go hand in hand.

What specialist advice is available to family businesses?

There are indeed specialist business insurance advisers. Speaking with an Independent Insurance Adviser can better help you understand the range of insurance products available to your business. That way, you can make intelligent decisions about the future of your family business.


Want to know more about insuring your family business?

You’ve worked so hard to get your family business where it is today, so it makes sense to protect it. It can be simpler and more cost-effective to have all of your insurance with one provider. When considering insurance for a family business, the best place to start is often talking with an Independent Insurance Adviser. They can help break down the jargon, make sure you have the best cover for your specific industry, and that you’re not paying for more cover than you need. Otherwise, you can estimate business insurance costs with an online insurance quote through our website. Being able to say you’re a family-owned business is special and worth protecting. For more business insurance tips, read our guide on business insurance for beginners


This content is brought to you by Chubb Insurance New Zealand Limited (“Chubb”) as a convenience to readers and is not intended to constitute advice (professional, financial or otherwise) or recommendations upon which a reader may rely. Any references to insurance cover are general in nature only and may not suit your particular circumstances. Chubb does not take into account your personal objectives, financial situation or needs and any insurance cover referred to is subject to the terms, conditions and exclusions set out in the relevant policy wording. Please obtain and read carefully the relevant insurance policy before deciding to acquire any insurance product. A policy wording can be obtained at through your broker or by contacting any of the Chubb offices. Chubb makes no warranty or guarantee about the accuracy, completeness, or adequacy of the content. Readers relying on any content do so at their own risk. It is the responsibility of the reader to evaluate the quality and accuracy of the content. Reference in this content (if any) to any specific commercial product, process, or service, and links from this content to other third party websites, do not constitute or imply an endorsement or recommendation by Chubb and shall not be used for advertising or service/product endorsement purposes. ©2020 Chubb Insurance New Zealand Limited Company No. 104656 FSP No. 35924. Chubb®, its logos, and Chubb.Insured.SM are protected trademarks of Chubb.

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