15 Dec, 2017 |
What is underinsurance and how do you avoid it?
- Underinsurance occurs where businesses have failed to correctly estimate the level of cover they need to protect their assets and costs of getting back up and running.
- Research suggests almost 90% of businesses are underinsured.
- Anywhere between 40% and 70% of small businesses fail to re-open after suffering a major disaster, such as a fire.
Having the right insurance is central to your business risk management strategy. If something goes wrong, you’ll want to make sure that any financial loss is covered. But it’s important that you have enough insurance for your needs, that you’re not underinsured. If you need to claim and find you don’t have enough insurance in place to cover your loss, this could jeopardise the future security of your business.
Research across the insurance industry reveals that almost 90% of businesses are underinsured. The key reasons for underinsurance include:
- Underestimating the cost of rebuilding a property.
- The cost of replacing machinery and business equipment.
- The length of time it takes to get a business up and running again after a disaster, such as a fire.
Figures from insurers suggest that anywhere between 40% and 70% of small businesses fail to reopen after a major disaster. While it’s difficult to pin insurers down on the facts behind these figures, we do know that the cause of these business failures is underinsurance. So why take the risk?
At Anthony Jones we use a business interruption calculator tool to accurately work out how much insurance our business customers need. Get in touch with us and we’ll make sure we put the right level of cover in place for your business so that, if disaster does strike, you don’t become just another business failure statistic.
For more in-depth information about underinsurance, read this whitepaper from our insurer partner, Zurich.