Small business owners face the greatest risk of losing their insurance coverage. This is especially true for small businesses that may not have the financial resources to cover the potential financial loss.
Recently, a UK study found that around 80% businesses might be underinsured. This is likely to rise due to the extraordinary number of new businesses that are being formed every day in the UK.
Commercial insurance is often overlooked because it can be complicated and dry. Business owners want to concentrate their efforts on customer service, lead generation and production.
This is a sensible, but extremely dangerous viewpoint, especially in today’s modern age.
Unfortunately, claims that you were unaware that you did not have the correct insurance coverage will rarely be accepted in court. You should therefore spend the time to learn exactly what is in your policy and what was omitted.
You should do this on a regular basis.
Don’t wait until you suffer a serious financial loss to inspect your insurance coverage. Instead, carefully analyze your business insurance and determine if it provides the right level of coverage in relation to the risks inherent in your particular industry.
Underinsurance is a very basic concept. It simply means that your insurance plan is less valuable than the total assets of your company. This can lead to you receiving less compensation than you need to bring your business back to pre-loss condition.
Complacency, or the belief that it will never happen to you, is the primary reason why business owners are not getting enough coverage. This is a false belief that has resulted in many closed businesses and many unemployed entrepreneurs.
It is important to ensure adequate coverage and that your business insurance is updated on a regular basis.
There are many factors that can affect the value of assets, including fluctuations in economic conditions. It is crucial that your insurance plan reflects current business health and not just what it was 12 months ago.
It is worth taking the time to do a thorough evaluation of your assets every year before you renew your business.
There are many reasons why businesses may not be adequately covered. However, it is crucial that you examine your current coverage and understand the risks of being underinsured. You also need to make changes to your business insurance to minimize any potential underinsurance.
Businesses are often not adequately covered under any commercial insurance policy. However, UK insurers assert that the following policies are most commonly underinsured: Property Insurance, Business Interruption Insurance and Cyber Liability Insurance.
There are many steps you can take to ensure your business is prepared for any eventuality.
This can be achieved by conducting regular valuations of your business assets and calculating an indemnity period that will allow your company enough time to recover from any financial losses or shortfalls. Also, you should review your business insurance policy regularly (preferably with legal insight) to make sure your company is fully covered.
Do not underestimate the importance of having adequate insurance coverage for your business.
You must do all you can to ensure your company is properly protected. Insurance coverage is the foundation on which all other business dealings should be built.
Ross Leese is the founder and owner of RAL Digital – a distributor of high quality information products such as eBooks and short reports.