It’s estimated that as many as 70% of Australia’s businesses suffer from underinsurance. If your business is one of them, the consequences to your livelihood could be enormous. Seek Emjay Insurance Brokers processional council for all commercial insurance matters.
Put simply, underinsurance comes about when business or personal assets are undervalued against your insurance policy. While this can result in lower insurance premiums, in the event of a major claim, the insurance process will not cover the full cost of the loss.
Again, put in the simplest terms, if a business premise is insured for $1.5m but is really worth $3m, then the insurance will only cover around 50% of the losses in the event of a claim. If a fire were to cause $500,000 of damage, the insurance payout would be in the region of $250,000 – leaving the business owner having to dip into their own reserves to make up the shortfall.
And the worst-case scenario? Your business may not recover at all.
That ought to be a chilling prospect for any business owner, but this is what can happen if insurance is looked at as a cost rather than a means of adequately protecting a livelihood. It’s very easy to go online and purchase business insurance directly from insurers at a low price. But the risk of underinsuring your assets – or failing to fully comprehend whether the policy will cover your business’s unique needs – is high.
Our advice is that business owners should review the value of their assets at least once a year, or every time the business grows, diversifies, or acquires new assets. Then make sure that sum is reflected in your insurance cover. The premium may be higher but you will know you are protected.
If working that out sounds daunting, thankfully the solution is an easy one: seek expert advice from an insurance broker.
Emjay Insurance Brokers is the broker of choice for the SME Association of Australia. As well as our own expertise in house, Emjay Insurance Brokers has long-standing relationships with valuers and loss adjustors. We can make sure that your properties and equipment is accurately valued. And of course, we can find an insurance solution to match your business’s unique risk profile.
Call us on 02 9796 0400 for advice on all your business insurance needs.