Ensuring that your business has the right level of cover is of paramount importance. However, many businesses are at risk of underinsurance.
What is underinsurance?
Underinsurance is when you or your business has an insurance policy that is inadequate and wouldn’t hold up in the event of a claim. This could be due to company assets being valued and insured at less than their true value, or the limit of indemnity could be too low, or the maximum indemnity period could be too short.
What are the potential consequences of underinsurance?
Underinsurance is an issue that isn’t always evident until it’s too late. If you are underinsured and need to make a claim, your business may not be able to claim for the full amount that has been lost. Ultimately, this could result in severe economic losses for you, the policyholder, as the claim would exceed the maximum amount that can be paid out.
It’s often the case that the initial cost of your business insurance premium will be low and therefore more attractive as a product. However, it is important to remember that losses arising from claiming while underinsured will be far greater than any savings made on a cheaper and less-adequate policy.
What can I do to prevent this?
Firstly, remember that if you are underinsured, you’re definitely not alone. It is estimated that 80% of commercial properties are underinsured!
To avoid these potentially catastrophic consequences, it’s vital that you or your team carries out a full assessment of your requirements prior to renewing. Here is a list of things you need to consider when deciding on a new policy for your business:
- Have any changes been made to your business recently that could affect the parameters of your insurance policy?
- Have you expanded your site(s)or carried out any renovations in the past 12 months?
- Have you acquired any new buildings or stock?
- Has there been a change in the value of your machinery, equipment or vehicle or freight fleet? If you don’t know when was the last time that you carried out an asset valuation?
- Have there been any changes in key personnel?
- Have you reviewed your business interruption policy in the last 12 months?
If any such changes have taken place, then you should let your insurance provider know as soon as possible. Alternatively, it is often possible to switch policy or provider and get cover that better suits your business while also paying less.
We can provide this service to you at no cost to you. So, if you’re worried you may be underinsured and/or paying too much, get in touch with our cost-cutting team on 01603 616300 or by emailing email@example.com. We can have a chat with you about your requirements then work with our various partners to find the very best deal for you. You can then rest assured that you have the right level of cover at the best possible price.