Underinsurance Hub

Your business is one of your most valuable assets and too important to risk potentially losing it. That’s why it’s vital to have the right levels of insurance in place to protect your business in the event of a claim.

Underinsurance, in simple terms, is when you don’t take out insurance to the right level, or put another way, taking out insurance at a level that’s simply not enough to cover what you wanted it to. Here are some of the ways you might be underinsured:

• Incorrect sums insured:

The sum insured is the amount it would cost to reinstate your business in the event of a loss up to the amount. If this isn’t calculated correctly, you could be underinsured. An up-to-date inventory of your business’s contents can help set the right sum insured, which needs to include everything in the premises and also reflect peak stock levels.

• Indemnity periods:

Many businesses underestimate how long it will take them to fully recover after a loss, opting for a standard 12-month indemnity period rather than a +24-month one.

• A change in business:

Businesses change over time. This could be an increase in revenue or changing from privately to publicly owned, and if a change occurs the business’s financial lines insurance will need to be reviewed and updated.

• Incorrect valuation:

It is essential to have the correct sum insured for any buildings for the full rebuilding cost. You shouldn’t use market value/valuations when setting your insurance value.