Seeing the true value of an insurance policy can be difficult; it’s very easy to just see it as an expensive set of documents that you receive once a year. But, you would never choose to run your business without it.
Insurance in itself is essentially a promise to cover you if you need to make a claim; it provides you with financial security and the peace of mind that you’re protected should something unexpected happen.
Why you should buy insurance
So, insurance is an intangible benefit to your business, a service that you have paid for that you may never get to use, but also a service that you hope that you will never need to use.
In our experience, particularly when it comes to buying business insurance, many see it as a necessary cost. Some business owners naively seek to pay as little as possible for their insurance policy by opting for lower amounts of cover, leading to their business potentially being underinsured.
Underinsurance occurs when you’ve not taken out the right amount of insurance to cover the losses you may incur as a result of an unexpected event. For example, the total rebuild costs of your premises being lower than it should be or the level of income stated not being enough to cover your bills while you are not trading following a disaster, like a flood.
According to the FCA’s Thematic Review, as much as 40% of SMEs could be underinsured, potentially putting their business on the line in the event of a loss. You might think you are saving money in the short term, but it could leave you exposed if you suffer a loss.
You’ll receive a claim amount that doesn’t reflect the true cost of the loss as the claim amount will be proportionately reduced, which means you’ll have to foot the bill for the remaining amount required to get your business back up and running again.
Why the amount matters
The amount you pay for an insurance policy is typically based on the amount of cover (i.e. limits, sums insured etc.) specified and the set of activities/circumstances that the policy will respond to.
A cheaper insurance policy may seem like an attractive choice from a cost perspective, but they can provide less protection, by having a reduced level of cover and/or impose terms and conditions that reduce the total risks covered by the policy.
So why wouldn’t you want to fully protect your livelihood, the business you’ve worked so hard to build?
Why risk going out of business?
Whether it’s theft, fire, a cyber-attack or an injury to a member of staff, incidents in the workplace can be costly and time-consuming to recover from. A report by the insurer RSA revealed that 28% of UK SME businesses would go out of business if they faced an unexpected cost of £50,000.
This could be a reality if you are underinsured or have not got the right insurance covers in place to protect your business. During the policy year, it is likely your business will experience some changes. This might be an increase in the level of your stock, you’ve taken on additional employees or invested in new and specialist machinery or equipment.
Speak to a broker
If this is the case, let your broker know so they can ensure everything is adequately covered and your policy remains up to date.
By purchasing your insurance through a professional insurance broker, such as Premierline, you will be offered advice by a trained insurance professional who will assess your specific business insurance needs, make recommendations on the type of insurance you should consider and explain the terms and conditions of your policy, if required, to ensure you understand them.
What’s more, as they work with a number of leading UK insurers, they can provide you with a comprehensive insurance policy at a competitive premium.
The insurance professionals at Premierline will help ensure your business is properly protected. Get in touch by phone or online for professional advice and insurance recommendations for your business.