How To Avoid Under-Insurance

Photo by Marily Torres from Pexels

A key component for any businesses is insurance; it will protect you when you need it, against:

• Loss or damage to your property.
• Injury to employees.
• Injury to or damage to property of third parties, caused by you or your business.

Correct insurance is a vital part of business stability and planning

In the time of a claim, finding your policy is insufficient can have tremendous consequences; under-insurance, as it is called, can be a substantial issue.

Top tips:

1. Professional valuation services will help you work out what your sums insured should be – you can find useful information from your broker or insurer, or via http://abi.bcis.co.uk or www.rics.org/bcis . To ensure the sums insured are correctly assessed regular valuations should be made.
2. When you purchase a business insurance policy, getting the numbers right will ensure you avoid any shortfall in your sums insured, becoming more unsuitable year-on-year.
3. The cost of rebuilding and not the market value of the property should be used for the sums insured on a buildings insurance policy – particular features of your premises might affect the cost of reconstruction.
4. Buying declaration-linked insurance for business interruption should be given due consideration because it provides an uplift of around 33%, so long as the sum insured and the duration of policy are both correct at the beginning and declarations made when called for by the insurers.
5. Remember that insurance policy definitions and accounting definitions of annual gross profit are different, when considering at business interruption insurance. Make sure the evaluation of your gross profit and the one in your policy matches.
6. 24 months is usually the minimum period needed for a business to fully recover its trading level and to rebuild its customer base; consideration of this is essential thinking about an indemnity period for business interruption.
7. Check your policy documents carefully; most insurers will draw your attention to the important conditions of your policy but it is very important that you check that there are no errors or omissions.
8. It is essential that you have disaster recovery or business continuity plans in place, as this may help you recover after a loss.
9. When buying an online package policy, make sure that the liability limits of indemnity, business interruption indemnity periods and other standard policy limits are adequate to your requirements.
10. Liability insurance policies — you should ensure that you have thought about the risk of claims against your business and make sure you know any liabilities you have taken on under your terms of business contracts. Liability policies can be complex.
11. In today’s technological environment, new risks are always emerging; so you should check into areas such as cyber risk or data protection, as your business practices change over time.

You may also be interested in:

• Public Liability Insurance
• Employer's Liability Insurance
• Crime Is Changing Are You Protected Against Online Crime?
• Who Needs Shop Insurance?