Many business owners fail to make the link between cash flow and the importance of having the right insurance cover to protect against unexpected events.
An accident, mishap or loss could put a hole in your cash flow that may be hard to repair. Now more than ever, it is important to ask yourself “is my business at risk from underinsurance?”
What is under-insurance?
Under-insurance is when your insurance cover is less than the value of your assets. The danger of this for business owners is that not only will you not be fully protected against the impact of an unexpected loss, but worse still, the insurer might make you liable for the percentage of the claim that is not insured.
Statistics reveal that at least 50 percent of Australian small businesses are underinsured, and therefore, at risk. That’s why it’s essential to review your program with your Insurance House broker.
Australia’s leading claims preparation expert, Dr Allan Manning of the LMI Group offers this tip to business owners, “never buy insurance on price alone”. Allan says, “the real issues when it comes to the crunch are:
Is the insurance adequate to ensure your business will survive and recover from a major insured loss?
Is the cover afforded by the policy adequate?
Does the insurer have the financial strength to pay multiple claims?
Will the claims service meet your needs?
Under-insurance is a reality for business owners, and a perpetual challenge in the insurance market. As brokers we act for the best interests of our clients that is why we encourage our business clients to have an annual review.