Property & Premises Cover

Property and premises insurance for NZ motor trade businesses protects the physical infrastructure that the business operates from — the workshop, showroom, yard, office, and all the equipment, fitout and stock within them. Given New Zealand's unique natural hazard environment and the capital-intensive nature of motor trade premises, this cover is foundational.

## New Zealand's Unique Risk Environment

NZ motor trade businesses face a distinctive set of property risks shaped by the country's geography and climate:

Earthquake: New Zealand sits on the Pacific Ring of Fire and is one of the most seismically active countries in the world. The Canterbury earthquakes of 2010–2011 caused billions of dollars in commercial property damage and forced many motor trade businesses to close temporarily or permanently. For commercial property, earthquake cover is arranged through private insurers (EQC cover applies primarily to residential buildings) — and is not always automatic. Explicitly confirm earthquake cover is included in your policy.

Extreme Weather: Cyclone Gabrielle (2023) caused unprecedented flooding across Hawke's Bay and other regions, destroying vehicles, equipment, and premises across the motor trade sector. Annual flooding events in low-lying areas, hailstorms causing vehicle and premises damage, and high winds are all significant and recurring risks for NZ dealers and workshops.

Fire: Motor trade premises have elevated fire risk compared to general commercial properties. Flammable materials — oil, grease, paint, solvents, fuels — combined with welding and grinding activities, electrical systems in multiple vehicles, and often large open premises with limited fire compartmentalisation, create a challenging risk profile. Spray booths are particularly high-risk and often require specific fire suppression systems as a policy condition.

## Insuring Workshop Premises: Key Considerations

Sum insured on a rebuild basis: Your sum insured should reflect the full rebuild cost — not the current market or rateable value of the property. In NZ, rebuild costs have increased significantly following the Canterbury events and post-COVID construction cost inflation. A workshop valued at $800,000 in 2018 may cost $1.5 million or more to rebuild in 2026 — and a market value-based sum insured may leave you severely under-insured.

Tenant versus owner: If you lease your premises, your landlord should insure the building structure. But as a tenant, you are responsible for your fitout, contents, business improvements, and any leasehold improvements you have made. Some commercial leases require tenants to contribute to building insurance or maintain minimum liability limits — review your lease carefully.

Temporary premises costs: If your workshop is rendered unusable by fire or flood, you will need alternative premises while repairs are carried out. Business interruption cover addresses the income loss — but the additional cost of relocating and operating from temporary premises can be substantial and should be included in your BI cover.

## EQC vs Private Insurance for Commercial Property

A common misconception is that EQC provides earthquake cover for all NZ property. EQC's residential building cover applies only to owner-occupied homes and their land. Commercial properties (including motor trade premises) are covered for earthquake damage through private insurers only. If your motor trade policy does not explicitly include earthquake as a covered peril, you may have no cover for what is one of NZ's most significant property risks.