The newly-released Vero SME Insurance Index 2022 reveals that only 43 per cent of small businesses think they are fully covered from insurable business risks. Making things worse, 34 per cent said they have no plan if something bad were to happen, while others haven’t even thought about what might happen or simply choose to “cross that bridge when they come to it”.
This is a cause for concern for insurers. Jane Mason, Head of Product Channels and Risk at SME insurance platform BizCover said, “Small businesses seem to be generally aware that they may be underinsured, however due to the additional cost of increasing coverage some may have made a choice to not look further into their cover due to price concerns.
“What’s worrying is that the dangers of underinsurance can leave the insured in a worse situation if underinsured or not insured at all,” Mason warned.
Insurers note that while many businesses understand the importance of insurance, they have also had to contend to multiple problems for the past couple of years from the bushires to the COVID-19 pandemic, to supply chain issues and rising costs, forcing businesses to find ways to increase their cashflow even at the expense of vital items such as insurance coverage.
“It’s tough out there. And unfortunately, some businesses put their insurance on the chopping block,” Mason said. “But what this also says is that the businesses who are more likely to be hit by underinsurance are already struggling.
“What was adequate cover a year ago may not be adequate cover now because of the rising cost of materials,” Mason added, stressing the importance of insurance even if only to cover the basics.
“It’s important to insure your business for an amount that is sufficient to cover not only the tangible assets, but the cost of repairs and any other variables that might leave you out of pocket,” Mason said. “After that, consider jumping online to compare quotes so you could then decide whether the price of the cover justifies the protection.”
And with inflation and the cost of claims rising, insurers are also pointing out that it’s become even more crucial to regularly keep track of the actual value of your building and business contents to avoid being left with inadequate cover if a claim were to arise.