You may consider getting your business insurance in place when you start up or go through a big transition is essential for trading and protecting both your business and your customers; but how often do your review that cover?
Yes, you annually renew your insurance but do you ever review whether it’s enough cover for your business before your renewal invite comes through?
If your business is growing successfully then you may need to look at extending your insurance cover. You could be running the risk of under-insurance if:
- You are stocking and selling more products
- You have invested in newer and upgraded machinery
- You have more IT equipment or other equipment than at your last valuation
- You have a larger staff than when you previously organised cover
Research carried out by Zurich Insurance found that 80% of businesses are under insured and almost 50% of these businesses do not realise the fact until it comes to the moment they are making a claim.
What Does Under-insurance mean for your Business?
As Zurich discovered it is often not until an insurance claim is made that a business realises they do not have the cover they require. It is at this point you may find out your insurance won’t cover your total loss because the business insurance you have in place does not include all of the elements of your business, including the more recent additions in terms of equipment and assets.
This is why it is also important to fully assess your insurance cover in all areas, including professional indemnity and public liability, as if you find a claim comes your way that is higher than your cover, the remainder of the bill will be your business’ responsibility.
Even if your business has a good cash flow and has reserves set aside for disaster scenarios, it will still be a blow to your business to need to pay out whatever percentage of a claim is not covered by your insurance premium.
In most instances under-insurance is an oversight but it is a clear indicator of how important it is to regularly review your level of cover. This is especially important if you invest in new business assets, premises or expand your staff.
The Association of British Insurers assert that 80% of businesses fail within 18 months of a disaster and without the right insurance in place it would be no surprise if it took even less time.
Once you have your policies in place it isn’t enough to simply forget about them and hope for the best.
You may want to consistently review and ensure you are not running the risk of under-insurance and putting your business in a tricky situation.
To find out how we can help you find insurance for your business, visit our insurance page to get a quote.