To avoid underinsurance, businesses can take proactive steps to ensure that their insurance coverage adequately reflects their needs and potential risks. Our specialists have provided the following guidance to prevent the risk of underinsurance for businesses:
Regular policy reviews
Work with a broker that specialises in your industry to periodically review your insurance programme to ensure it reflects changes in the value of assets, business operations and other relevant factors.
These reviews should be conducted reviews annually as a minimum or whenever significant changes occur, such as property renovations, business expansions, or changes in inventory.
Appraisals and valuations
Obtain professional appraisals or valuations to determine the current replacement cost of property, equipment, or other insured assets to ensure you have the correct level of cover in place to protect these.
Your broker can then use these accurate and up-to-date valuations to set appropriate coverage limits.
Detailed documentation
Maintain detailed records of assets, including receipts, invoices, and photographs, to provide evidence of their value in the event of a claim.
Document any improvements or changes to property or business operations.
Risk assessment
Work with insurance professionals to understand the specific risks associated with your industry or personal circumstances and conduct a thorough risk assessment to identify potential risks and liabilities.
Review coverage types
Understand the different types of coverage available and assess whether your policies provide comprehensive protection.
Consider additional coverage options, such as Business Interruption insurance or umbrella policies to enhance overall protection.
Policy endorsements
Explore policy endorsements that can be added to existing insurance programme to cover specific risks or increase coverage limits.
Legal and contractual obligations
Be aware of any legal or contractual obligations regarding insurance coverage.
Ensure that your insurance policies meet the requirements outlined in contracts, leases, or industry regulations.
Employee training
Educate employees about the importance of maintaining accurate records and promptly reporting any changes or incidents that could affect insurance coverage.
By adopting these proactive measures and staying vigilant about changes in circumstances, businesses can reduce the risk of underinsurance and enhance their ability to recover from unexpected events.
Benefits of a proactive approach to underinsurance
Find out about why it’s important to be proactive in how your business approaches the risk of underinsurance.
