Under insurance continues to be a widespread and persistent problem throughout the United Kingdom. In fact, an estimated 40% of businesses and 80% of commercial properties are under insured. This occurs when a business has insufficient cover to meet its needs, whether that means its assets are valued and insured at less than their true value, its limit of indemnity is too low or its maximum indemnity period is too short.

Even though under insurance is a common enough situation to find yourself in, there are steps that you can take to ensure that you begin 2018 with your best foot forward. This involves scrutinising your business and updating all of your insurance policies with any changes that your organisation may have made in 2017, which could include new buildings, acquired stock, and fluctuation in the value of machinery, equipment and vehicles.

After you’ve taken a critical overview of your business, here are some additional pieces of guidance to help ensure that you are not underinsured:

Property policies:

• Provide the cost of rebuilding the property (including the costs of demolition, materials and professional fees) to your broker rather than the market value or the amount you purchased it for.
• Increase the total amount that you have insured in order to accurately reflect new machinery and renovations.
• Remember to include the value of replacing the contents—including machinery and equipment—in your policy.

Business interruption policies:

• Review your business interruption (BI) policy at least annually to ensure that all your information is up to date.
• Calculate an appropriate indemnity period that allows your organisation enough time to recover.
• Consider that potential future trends may have a noticeable impact on your BI insurance and include the value of that possibility in your policy.

For more information about how you can protect your organisation from under insurance, contact the team at Lockyers today.