Is Your Business Under Insured? What Are The Risks?
Not having enough insurance cover for your business can put you at major risk of financial losses. Many small businesses are either underinsured or have no insurance cover at all.
It is not uncommon for small businesses to be under or insufficiently insured- simply because they are unaware of their risks and don’t have adequate information to make an informed decision.
Some important insurances are profit/business interruption cover, flood cover, fire insurance, cyber insurance, and management liability. When you do not have one or more of these it means that you could be at risk of financial loss- if you were to be hit by a cyber-attack, flood, or fire outbreak for example. The cost of replacing your lost items and getting your business back to normal might be too much and can run you into financial jeopardy.
Covering your business with insufficient insurance amount is also a form of under-insurance. You will not be eligible for a maximum claim settlement in a case of accident or any loss of property. Assuming you only declared half of the value of your assets at the point of purchasing your insurance, then you will only get half of the loss covered by the insurer. When getting insurance, ensure that the value will be able to fully restock the inventory and restore the building if there is ever a major loss.
Reasons Why Some Small Businesses Are Under Insured
Some major factors that contribute to SMEs not getting full insurance covers include;
Purchasing an incorrect cover: This could look like; purchasing the incorrect policy (it is important to read the wording to insure that particular insurance company has sufficient cover for your type of business), or it could be that the sum insured is inadequate to cover all of your losses.
Lack of information: Many business owners do not have the complete information in regards to the types of insurance policies that their business may need, and how they work. For example; Management and Directors/Officers Liability, Trade credit, Cyber Insurance, are just some examples of insurance policies that require technical understanding to make the right choice.
Insufficient review of existing insurance policies: During insurance renewal or when doing a business review, it is important to consider certain changes to your business and ensure that you update your insurance policies to reflect these changes. It is also a condition of insurance policies to keep the insurer up to date with any change in your building structure, inventory, or general business operations.
How To Get Professional Insurance Help
To put your business in a good position should an accident occur, it is necessary to seek professional insurance assistance. Talk to your insurance adviser who can educate you on the available insurance policies and what works for your type of business. Working with the insurer to deduce the necessary insurance policies for your business will save you a lot of time and money.
Your insurance adviser can help you avoid falling into financial potholes due to losses. With rising insurance premiums and the unwillingness of many insurance companies to underwrite some type of business, getting a professional insurance adviser increases your odds.
General Advice Warning
The information provided is to be regarded as general advice. Whilst we may have collected risk information, your personal objectives, needs or financial situations were not taken into account when preparing this information. We recommend that you consider the suitability of this general advice, in respect of your objectives, financial situation and needs before acting on it. You should obtain and consider the relevant product disclosure statement before making any decision to purchase this financial product.