Do you have enough cover? Don't get burnt - Underinsurance is a scourge!

Do you have enough cover? Don't get burnt - Underinsurance is a scourge!

Small businesses continue to be drastically underinsured, according to recent survey findings. Underinsurance is not simply about having a lower sum insured than required, but also about not taking other important covers that are available.

A major finding of the 2016 Vero Insurance Index, which surveyed more than 1500 Small to Medium Enterprise (SME) owners nationally, reveals many business owners are underinsured. Further they do not even know it.

 "... one of the most vital sections of a Business Package policy."

The Index shows that 80% of SMEs who rank ‘being unable to trade’ as one of their top concerns, state they do not have Business Interruption Insurance - one of the most vital sections of a Business Package policy.

Insurance Brokers like CPR Insurance Services would have definitely advised them of the importance of this cover. However, most clients are seeking to save on the costs of this protection due to difficult economic conditions.

Almost one-third of SMEs claim to be very concerned about being unable to trade for a long period of time and 31% are worried about equipment failure or breakdown.

"... Public Liability policy does not cover you for Cyber Liability claims."

Workplace accidents, cyber-attack and being sued are also a concern for many. You may be interested to know that your Public Liability policy does not cover you for Cyber Liability claims. You need a dedicated policy for that.

It is the same for Work place accidents, you have Workers Compensation for your employees, and liability is picked up by Workcover too. However, it does not pick up fines and penalties or the legal defence costs if investigated by Workplace Health and Safety authorities. You need either a Statutory Liability or Management Liability cover for this.

Public Liability policies cover you for being sued, but only for property damage or bodily injury caused to another person arising out of the activities of the business. They do not cover you where it is a financial loss only, if caused by providing wrong advice. You need Professional Indemnity cover for this.

When asked what type of information clients would like to receive from their broker, information about general business risks (38%) rated highly, as did a risk analysis of their business (43%). Hopefully all our clients are aware that we want to be their trusted adviser and can provide these services. We hope you see us as insurance experts, not just people who can search out the best insurance deal for you.

Many SMEs have moved away from broking services. The Index results showed 38% of SME business owners purchased insurance solely through a broker, down from 40% the year before. The percentage of business owners who purchase insurance direct from an insurer has also risen to 57%. These are businesses looking to cut costs rather than have the benefit of good advice, saving of time and someone to assist you at claims time.

Most of us will get an accountant to do their tax for them, because they are experts in the requirements of Corporation Law and Taxation Laws. We will get our legal advice from a lawyer. We think it is funny when people go to “Doctor Google” for medical assistance instead of going to their GP.  Insurance Brokers are your advisors on pure risks that could affect your business and we are here to help you.

Price is an important factor, we all agree, but so is making sure you have the right cover. Having an expert on your side at either the time of making a claim, or simply to tell you what the language of a policy means.  An Insurance Broker can make you think about your risks, how best to manage them, and find solutions for handling that risk. At the end of the day it is your decision what to cover, but at least you have received the advice to consider it.

General Advice Warning: This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is appropriate for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.

Robert Cooper, CPR Insurance Services

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