Businesses that sell legal highs, or those that are located near legal high retailers, could wind up paying higher insurance premiums.
Hamilton Central Business Association general manager Sandy Turner said she had had verbal communication from two leading insurers that insuring this type of business was a "no-no" for them.
"The problem is a lot of property owners don't realise their buildings won't be insured," said Ms Turner.
"Basically we're going to send that information out to our property owners and then it is up to them and go back to their insurance company and look at how they manage that."
A Hamilton insurance broker, name withheld, said the reasoning is the damage the customers can cause to the surrounding buildings.