Recent research by Allianz, a leading insurance provider, revealed that approximately 80% of UK SMEs are underinsured.
What does this mean?
Underinsurance happens when the insurance coverage purchased is insufficient, leaving a business without the financial protection needed. Any business can be at risk if they don’t have the right level of insurance, and this could lead to serious financial problems.
So, is it worth the gamble of not investing in proper insurance, knowing that unexpected events can happen anytime?
Unfortunately, businesses face surprises every day—injuries, equipment breakdowns, theft, and more. For small and medium-sized businesses (SMEs), these surprises can hit even harder.
Here are some tips to help SMEs avoid being underinsured:
Identify Gaps in Coverage
As your business evolves, so do the risks it faces. Ensuring your insurance coverage remains aligned with your activities is crucial. New risks can emerge, and circumstances can change. Regularly reviewing and updating your insurance can help you stay protected against threats.
Consider a real-life example: a hotel owner failed to disclose a County Court Judgment (CCJ) on their insurance application. When a £500,000 fire broke out at the hotel, the insurer refused to pay out the claim because of the non-disclosure. Despite the owner being praised as a hero for rescuing guests from the burning building, the financial loss was significant due to the insurance gap.
Why Review Your Coverage?
The primary reason for reviewing your business insurance is to ensure that your coverage reflects your current situation. Your business’s financial priorities and risk profile can change over time. Regular reviews help ensure that your insurance continues to provide the level of protection you need.
By neglecting to review your insurance, you risk facing a payout shortfall or even a complete denial of a claim. The hotel fire case is a stark reminder of what can happen when insurance details are outdated or incomplete. Regular updates and honest communication with your insurer can prevent such situations.
Buying Insurance Online: Is It Safe?
In today’s digital age, buying insurance online is more convenient than ever. But it’s important to know that there are significant drawbacks:
- Customisation Challenges: Tailoring a policy to your specific needs online is harder than working with an independent broker.
- Limited Coverage Options: This can lead to higher prices or inadequate coverage, leaving you underinsured.
- Privacy Concerns: Providing personal information, such as your Social Security number, through a website can raise security issues.
- DIY Claims: Filing a claim online means you won’t have someone to guide you through the process, which can be complicated.
Get Expert Help
With so many business insurance options available, finding the right one can be challenging. Professional advice can be invaluable. Our team of business insurance experts can help ensure you have the right amount of coverage and that your policy fits your specific needs, for free.
We also offer free annual reviews to make sure your coverage continues to align with your business as it grows and changes. This proactive approach helps you avoid the pitfalls of underinsurance.