Commercial Property Q&A — NZ

Short, sourced answers to the highest-intent NZ mdbi questions. Each Q drills into the relevant fact keys across every ingested wording — verbatim policy text per insurer, not paraphrased.

• What does material damage (MD) insurance cover for a commercial building?

  MD covers accidental physical loss or damage to the insured property (building, fitout, plant, stock) caused by an insured event — typically fire, storm, flood, impact, theft. Defined-perils policies list each event; all-risks policies cover anything except what's specifically excluded.

• What is business interruption (BI) cover and how is the indemnity period calculated?

  BI cover compensates for lost revenue/gross profit + increased costs during the period it takes to restore operations after an insured MD event. The indemnity period (typically 12-36 months) is the maximum time benefits flow; the calculation basis (gross profit / insured profit / standard turnover) varies by wording.

• Is earthquake damage covered under a commercial-property policy?

  Yes — but typically as a separately-priced extension or with a separate (often very high) excess. NZ commercial-property wordings generally bundle natural-disaster perils (earthquake, volcanic, tsunami, hydrothermal) under one section. Excess is often a percentage of the sum insured (typically 2-10%) with a minimum dollar floor.

• What perils are typically excluded from commercial-property cover?

  Common exclusions: war/terrorism, nuclear, computer virus/cyber, wear and tear, faulty design/workmanship, electronic data loss, contractual liability, gradual pollution, dishonesty of employees (a separate Crime cover), inherent vice. Each wording has its own specific list — never assume.

• What sublimits typically apply to a commercial MD policy?

  Sublimits cap the insurer's exposure on specific risk categories regardless of the overall sum insured. Common sublimits: theft (often $50k-$500k), money (small amount), customers' goods, employees' personal effects, signs/awnings, debris removal, professional fees, public-authority requirements, removal of debris. Sublimits are usually well below the property sum insured.

• How long is the indemnity period on commercial BI?

  The indemnity period defines the maximum time BI benefits flow after an MD event. 12 months is the conservative default; 18-24 months is standard for businesses with significant rebuild lead time; 36 months is common for specialised manufacturing or buildings needing council/heritage consent. Your indemnity period should match how long it'd realistically take to fully restore trading.

• What's the difference between reinstatement value and indemnity value at total loss?

  Reinstatement value (typically the default) = the cost to rebuild new for old. Indemnity value = the value of the property immediately before the loss (depreciated). Reinstatement is more expensive premium but pays out enough to actually rebuild; indemnity is cheaper but caps at depreciated value (problem for older buildings).

• Does commercial MD cover money / employee theft?

  Money cover (cash on premises, in transit) is usually a small sublimit ($1k-$10k typical) under the MD policy. Employee dishonesty / fidelity (staff stealing money or stock) is generally EXCLUDED from MD — needs a separate Commercial Crime policy.