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Is Your Business Underinsured?
Does your business have the insurance it needs to protect its success?
“1 in 10 Australian small businesses with insurance don’t have enough cover to protect themselves.”
The risk of underinsurance
The difference insurance can make
Type of cover: Business Interruption
Scenario: A dental clinic is severely damaged when part of the ceiling caves in during a major storm. The business is forced to close for two months of repairs.
With insurance: The owner's Business Interruption insurance can cover the amount of lost income while the business is closed.
Without insurance: The business loses two months of revenue and struggles for weeks afterwards to generate enough profit to make up for the lost income.
Type of cover: Professional Indemnity
Scenario: An architecture firm provides a flawed design, and the building then needs to be demolished and rebuilt from scratch. The client sues the arcitect for these costs.
With insurance: The firm has Professional Indemnity Insurance which can cover this amount, plus most legal costs.
Without insurance: The firm can't afford to cover the costs and is forced to go into liquidation.
Type of cover: Property Insurance
Scenario: A community organisation is targeted by vandals, who break a window to enter the building and steal computers.
With insurance: With Property Insurance cover, the organisation is able to repair the damage and replace the computers with new ones.
Without insurance: The organisation doesn't have enough cash to pay for the repairs and replacement computers and has to close down.
Typer of cover: Management Liability
Scenario: An agency terminates the employment of a worker, on the grounds of serious misconduct. He sues for unfair dismissal and is awarded a large payout.
With insurance: The agency can be covered for the damages and most legal costs by Management Liability insurance.
How do you know if you are underinsured?
- You haven’t updated your insurance cover to reflect the growth of your business.
- Your insurance is based on an outdated replacement cost of your business assets.
- You are covered for damage to your business premises but have not considered other forms of financial loss such as business interruption and management liability.
How can we help?
Clear Insurance Pty Ltd. ABN. 41 601 916 689. AFSL No. 548953.
All information above has been provided by the author.
Clear Insurance, ABN 41601916689, AFSL 548953
This article originally appeared on Clear Insurance Blog and has been published here with permission.
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