Is your business underinsured?
- Aug 17, 2017
- 4 min read
Here’s an all too common scenario. A business owner is asleep after a hard day’s work and the phone rings; his business premises are on fire. He races across town and literally watches as his whole life’s work goes up in smoke.
For many, the business is everything: their sole source of income; their only investment; their superannuation for the future… and the reason for the mortgage over the home.
As daylight breaks and after the fire brigade have gone, a new phase begins – police, investigation and perhaps an insurance loss adjuster. Employees arrive at work worried about their jobs; anxious customers awaiting delivery of big orders hear the rumors of fire and try to make contact.
By this time the insurance broker has been contacted to see if the premium was paid. Did I get the bill? Have I paid it? Am I fully covered?
Regardless of this, Insurance Industry analysis has found that there are still three significant areas of underinsurance that catch most small businesses out…
What’s the reality
We know that 84% of small to medium enterprises (SME’s) believe they are fully insured. Regardless of this, Insurance Industry analysis has found that there are still three significant areas of underinsurance that catch most small businesses out.
The first is removal of debris. Building fires generate tonnes of debris and many people just don’t realise the high cost of removal and dumping after a fire.
The second is property values. According to a leading Insurer 75% of businesses roll over their sums insured year after year. After three years 46% still have the same sums insured as they did three years before. However in that time building costs have gone up an average of 20%.
But sky-high building costs aren’t the worst issue. Consider the cost of machinery and plant increases and this one example, stainless steel goods – up 50% over the last 12 months alone bitcoin online casinos that accept australian players. Clearly, any restaurant or anyone in the food industry that needs stainless steel fixtures and fittings will find that they may be grossly underinsured.
Perhaps the area that has the most underinsurance of all is business interruption.
Research shows that only 31% of SME’s have any form of Business Interruption cover and even those who do, don’t have enough. The bottom line is that in the majority of cases, businesses without a sensible level of business interruption insurance will not survive a serious insured event.
That’s three strikes, all conspiring to destroy your business for good.
How would you fare?
There is a balance between being adequately covered and not breaking the bank – you need to speak to someone who can steer you in the right direction.