The summer season is considered a very busy and ‘silly’ time for many small businesses. However, this season is also a period of increased key exposures that many small businesses might not be prepared for due to underinsurance.
A 2022 survey by BizCover for Brokers insurer partner Vero found that 57 per cent of the small and medium businesses surveyed were only “mostly covered” or “partially covered” for risks. Of those, 34 per cent have admitted they had no plan if their business experienced an adverse event.
“Underinsurance is a year-round issue for small businesses, but summer trading can make these coverage gaps more serious,” Jane Mason, Head of Intermediate Business at insurtech platform BizCover for Brokers, said. “It’s essential that brokers are able to help SMEs identify and address areas where they do not have adequate cover.”
The Vero survey also found that 52 per cent of SMEs who purchase insurance through a broker said that they are completely covered for insurable risks compared to just 39 per cent of direct buyers, underscoring the vital roles that broker education and advice play in helping SMEs avoid underinsurance.
Bizcover is urging brokers to reach out to SME clients in retail, hospitality, beauty, and other key industries to ensure that clients have the right cover and that their policies can handle the November to February rush.
“There are areas where end-of-year trading may prompt policy adjustments,” Mason said. “Contents cover is a prime example, businesses may store more stock in the lead up to Christmas and their policy should be reviewed to ensure they are adequately covered for the increase in stock. Businesses outside of retail like cafes, restaurants, and salons might also want to check that they have appropriate cover and adequate limits to handle summer trading.”
Mason pointed out that business Interruption cover may also need to be reviewed to ensure adequate protection during peak trading periods, as an unplanned closure during the busiest time of the year might impact a business’s ability to survive future trading downturns.
And cyber policies should also be checked, as cyberattacks occurring during the summer season may be especially inconvenient as they can bring operations to a standstill, costing SMEs far more than they realise in lost profits and productivity. In such a case, the 24-hour incident response services provided by most cyber liability policies can help insured small businesses contain the damage from a cyberattack and restore their operations as quickly as possible.
