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Many businesses, regardless of industry, are risking their own survival by unwittingly remaining underinsured. A bout of bad weather or a fire could spell the end of your business.
A survey conducted in 2012 by the Building Cost Information Service found that 80% of commercial properties in the United Kingdom were underinsured. A separate survey in 2014 found that 62% of small and medium sized businesses were underinsured due to a lack of business interruption involved or due to a total ignorance of whether they even have that policy.
The worst case scenario is you might not even know you’re underinsured. Should your business befall a major loss event, such as a data breach, flood, or fire, the only way to protect yourself is to be proactive, ensure you know your policy and that you can protect your livelihood.
The Dangers of Being Underinsured
Being underinsured is a problem that can lead to multiple outcomes, all of which are capable of destroying your business.
If you need to make a claim, the payout will be so small, it won’t cover the cost of rebuilding your business.
If you have an inadequate indemnity period, then your insurance payments may stop before your business has fully recovered, leaving it stagnant whilst you try to find a way to reboot. A similar problem arises if you undervalue your business’ revenue. An unrepresented revenue could mean you only receive a fraction of your business’ value. In fact an insurance provider could even void your cover based on misrepresentation.
An underinsured business is vulnerable to financial ruin. With inadequate cover, you may need to close your doors for an indefinite amount of time – even forever.
What policies are most commonly underinsured?
Any commercial policy can be underinsured, but insurers report that the following are the most commonly underinsured policies:
How Can I Avoid Being Underinsured?
You can prevent your business from being underinsured by accomplishing the following:
Your business is your lifeblood, and you should do everything you can to protect it—this includes properly insuring it against any possible damage. SG Chaseside Insurance Solutions is here to help you review your policies and to ensure that you are covered for any type of claim.