Business Income Protection Insurance in New Zealand
Business Income Protection pays monthly benefit payments to help cover your business overheads if you can't work due to sickness or injury. Unlike Key Person Insurance (which pays a lump sum), this provides ongoing monthly income to keep your business running while you recover.
Whether you're a start-up or an established business, Business Income Protection ensures your rent, utilities, staff wages, and other fixed costs are covered when you can't be there.
DBI LTD, Financial Adviser (FSP 1007984), operating under AIA Thrive Limited (FSP 665291).
Key Facts
Monthly payments to cover business overheads (not lump sums)
Covers business expenses like rent, utilities, staff wages, loan repayments
Two options: Start-Up (for businesses under 3 years) or Business Continuity (for established businesses)
Tax treatment: Premiums are generally tax deductible where the policy covers business expenses. Benefits received are typically taxable income. Always confirm with your accountant.
What is Business Income Protection?
Business Income Protection is one of several types of business insurance that pays monthly benefit payments to cover your business overheads if you can't work due to sickness or injury. It's designed specifically for business owners, self-employed individuals, and contractors who have fixed business expenses to pay every month.
This is different from personal income protection, which replaces your personal income. Business Income Protection covers your business expenses (rent, utilities, staff wages, loan repayments, accounting fees, and other fixed costs) so your business can survive while you're unable to work.
This includes self-employed professionals (such as real estate agents, consultants, and contractors) who have ongoing business costs even when they can't generate income.
| Cover Type | What It Covers | Who It's For |
|---|---|---|
| Business Income Protection | Business overheads: rent, utilities, staff wages, loan repayments | Business owners with fixed monthly expenses |
| Personal Income Protection | Your personal income: mortgage, groceries, bills, lifestyle | Anyone who earns an income (employed or self-employed) |
Many business owners need both, personal income protection to cover their household expenses, and business income protection to cover their business overheads. We can help you understand which option (or combination) is right for your situation.
Why Business Income Protection Matters
If you're sick or injured and can't work, your business expenses don't stop. Rent is still due. Utilities still need paying. Staff still need wages. Loan repayments continue. Without Business Income Protection, you could be forced to close your business or use personal savings to keep it afloat.
This is especially important for commission-based or self-employed roles where income stops immediately, but expenses continue.
Business expenses typically covered:
Covered expenses vary by insurer and policy wording. Not all expenses are automatically included.
Rent or mortgage on business premises
Utilities (power, water, internet, phone)
Staff salaries and wages
Loan or lease repayments
Accounting and legal fees
Insurance premiums
Business rates and compliance costs
Equipment leasing or hire purchase
Only genuine business expenses are covered. Personal drawings and lifestyle costs are excluded.
Two Options: Start-Up vs Business Continuity
Business Income Protection comes in two main types, depending on how long your business has been operating. The key difference is how your benefit amount is calculated.
Start-Up Business Income Protection
For businesses under 3 years old
How it works:
Because your business is new and doesn't have 36 months of financial records, you choose a monthly benefit amount based on your projected business expenses. For example, if your rent, utilities, and other fixed costs total $6,000/month, you can insure for $6,000/month.
✅ Pros:
- •Available immediately for new businesses
- •You choose the benefit amount
- •No need for 36 months of financial records
⚠️ Considerations:
- •Often reviewed and may convert to Business Continuity once sufficient financial history is available, subject to insurer criteria (typically after 12–36 months)
Business Continuity Income Protection
For established businesses (3+ years old)
How it works:
Your benefit amount is based on your financials for the past 36 months (proven with financial statements or tax returns). This can be calculated on an agreed value or indemnity basis, depending on the policy structure.
✅ Pros:
- •Based on real financial data (more accurate)
- •Covers actual expenses incurred during claim
⚠️ Considerations:
- •Requires 36 months of financial records
- •Need to provide financial documentation when applying
- •Only available for established businesses
Quick tip: If you're starting a new business, Start-Up cover gives you immediate protection. Once you've been operating for 3+ years, you can usually switch to Business Continuity cover for better cover and more accurate coverage.
Rural Continuity (Primary Sector Business Income Protection)
Rural Continuity is most commonly used in the primary sector where farm cashflow and labour needs are linked to turnover rather than fixed monthly expenses.
Rural Continuity is a form of Business Income Protection designed specifically for farmers and primary producers. It provides monthly payments to help maintain farm operations if the business owner is unable to work due to illness or injury.
Unlike standard business income protection, which is usually based on business expenses, Rural Continuity benefits are typically linked to farm turnover. This reflects the unique structure of rural businesses, where income may be seasonal and traditional expense-based cover is not always practical.
Rural Continuity is commonly used to help cover:
Contract labour or relief staff
Farm operating costs during peak seasons
Essential running expenses to keep the farm productive
Ongoing commitments while recovery or rehabilitation occurs
Key features (varies by insurer and policy):
Monthly benefit payments (not lump sums)
Benefits often calculated using a percentage of gross farm turnover
Designed for self-employed farmers and sharemilkers
Wait periods and benefit periods apply, similar to other Business Income Protection policies
Payments may be reduced by other disability income benefits, depending on policy structure
Rural Continuity does not replace personal income. Its purpose is to support the ongoing operation of the farming business, allowing production to continue while the insured person recovers or adjusts their role.
Eligibility, benefit calculations, offsets, and covered costs vary by policy wording. Advice is important to ensure the structure matches the farm's operating model.
Example Scenario: Rural Continuity in Action (Indicative)
Mark, Dairy Farmer
Waikato, New Zealand
The situation:
Mark operates a dairy farm with annual turnover of $1.1 million. Rural Continuity style cover is commonly structured as up to 35% of turnover, capped at up to $10,000 per month (up to $120,000 per year). Mark chooses a monthly benefit of $10,000.
Mark suffers a serious injury and is unable to work for 5 months.
The cover (indicative):
- •Monthly benefit insured: $10,000 (the amount paid each month while unable to work)
- •Wait period: 8 weeks (time before payments start)
- •Benefit period: up to 12 months (maximum time payments continue)
What happened:
Mark was off work for 5 months total: 8 weeks wait period (2 months) → 3 months benefit paid at $10,000/month = $30,000 total payout.
How the money helped:
- •Paid for relief staff and contract labour
- •Covered additional operating costs during peak workload
- •Reduced pressure on cashflow while Mark recovered
The outcome:
The farm continued operating without disruption, avoiding production losses and protecting long-term business value.
Figures are indicative only. Eligibility, benefit calculations, offsets, wait periods, and claim payments are subject to policy terms and medical assessment. Rural Continuity is designed to support business continuity, not replace personal income.
Business Income Protection vs Personal Income Protection
Many business owners are confused about the difference between Business Income Protection and Personal Income Protection. Here's how to think about it:
Personal Income Protection
Replaces your personal income if you can't work due to sickness or injury.
Covers:
- •Your mortgage or rent (personal home)
- •Groceries and household bills
- •Car payments, childcare, school fees
- •Your personal lifestyle expenses
→ Keeps your household running
Business Income Protection
Covers your business expenses if you can't work due to sickness or injury.
Covers:
- •Business rent or mortgage
- •Staff wages and salaries
- •Utilities, insurance, loan repayments
- •Your business fixed costs
→ Keeps your business running
Do you need both?
Often, yes, especially where business expenses and personal living costs are both significant. Business Income Protection keeps your business afloat by paying your business expenses. But it doesn't replace your personal income, that's what Personal Income Protection is for.
If you're self-employed and your business is your sole income source, get in touch, we can help you calculate what you need for each type of cover.
How Business Income Protection Works in New Zealand
Here's how Business Income Protection typically works in practice:
Choose your cover
Calculate your monthly business expenses (rent, staff wages, utilities, loan repayments, etc.) and choose a monthly benefit amount.
Choose wait period
Select a wait period (typically 4, 8, or 13 weeks). This is how long you must be off work before payments start. Longer wait periods = lower premiums.
You're covered
If you're sick or injured and can't work, wait out your wait period. After that, your monthly payments begin.
Receive payments
You may receive monthly payments to help cover your business overheads while you're unable to work (up to the policy's benefit period, typically 2 or 5 years).
Important policy features:
Wait Period (Excess Period):
The time you must be off work before payments start. Common options: 4 weeks, 8 weeks, 13 weeks. Longer wait = lower premiums.
Benefit Period:
How long payments continue if you remain unable to work. Typically 1 to 2 years. Some policies offer benefits up to age 65.
Monthly Benefit Amount:
The amount paid each month to cover your business expenses. For Start-Up cover, you choose this. For Business Continuity, it's based on your last 12 months of actual expenses. For self-employed individuals, only genuine business expenses can be insured, not personal drawings or commission income.
Tax Deductibility:
Premiums may be tax deductible where the policy insures business expenses. Confirm with your accountant.
Who Needs Business Income Protection?
Business Income Protection is essential for any business owner or self-employed person who has fixed monthly business expenses. If your business would struggle to pay its bills if you couldn't work, you need this cover.
Business owners with premises
If you rent or own business premises, you have fixed costs that must be paid every month, even if you can't work.
Employers with staff
If you employ staff, their wages are a significant fixed cost. Business Income Protection ensures you can keep paying them if you're off work.
Self-employed contractors
Builders, plumbers, electricians, and other contractors with vehicle leases, tool hire, and equipment costs.
Businesses with loan repayments
If you have business loans, equipment finance, or hire purchase agreements, these payments continue even if you're off work.
Professional practices
Accountants, lawyers, dentists, doctors, and consultants with practice overheads, professional indemnity insurance, and compliance costs.
Commission-based professionals
Real estate agents, mortgage advisers, and other commission-based roles. If your income stops when you can't work but your marketing, office, vehicle, and compliance costs continue, Business Income Protection helps keep your business running.
Start-ups and new businesses
If you've recently started a business (under 3 years old), Start-Up Business Income Protection gives you immediate cover based on projected expenses.
Frequently Asked Questions
Common questions about Business Income Protection in New Zealand.
What is Business Income Protection?
How is Business Income Protection different from Key Person Insurance?
Can I have both Business Income Protection and personal income protection?
Is Business Income Protection only for large businesses?
What types of expenses can Business Income Protection help cover?
How long do payments last if I make a claim?
Are Business Income Protection premiums tax deductible?
Can Business Income Protection apply to rural or farming businesses?
Have more questions?
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