When was the last time someone in your business said: “We better check the insurance”?
Maybe never? Or maybe that one time you had a burst pipe over winter?
I’ll level with you, not many people in insurance even get that excited about insurance. And we know it’s usually seen as somewhere between a grudge purchase and a necessary evil.
But if ever there was a time to pay attention to the detail of your policy, it’s now.
We’ve all heard about rising costs of everything – whether it’s your energy bills or the growing payroll – and a major risk for most businesses when it comes to insurance is inflation. Prices have risen on everything from equipment to materials, machinery to property. The sum for which you insured your key piece of kit will almost certainly have gone through the roof. Let’s say several years ago you bought a machine for £250,000 and insured it for that value. How much will it cost to buy a new one today if it irretrievably goes ‘bang’?
Something like 40% of UK businesses are underinsured – I suspect a much higher proportion of these are unaware that it applies to them. The most effective way to prevent this is very simple. Get a proper valuation done, and make sure you revisit it every few years. If you haven’t done it recently, I’d suggest it’s quite pressing.
The obvious probably does need to be stated here: an up-to-date valuation can mean the difference between your policy covering your loss and leaving you with a potentially catastrophic shortfall. There are policy extensions you can add which can help to alleviate the effects of inflation, or where sums insured turn out to be slightly less than they should be. The accompanying increased cost will seem like a pain in the backside until the day you’re really, really glad you took the right advice and paid a little bit more.
Getting to this point, of course, needs just a bit of time thinking about your risk and how well it’s covered. A recent survey of UK businesses by GlobalData said 29% cancelled cyber insurance policies last year to save costs. In the same year, 39% of business experienced a breach, according to the Department of Culture, Media and Sport; medium and large businesses lost an average of almost £20,000 to cyber-crime in 2021. That’s much more than most cyber policies would cost and, when attacks are becoming more and more frequent, cancelling a policy to save cost feels a bit like leaving your parachute on the ground to save room in the aeroplane.
That principle is true whichever aspect of your commercial risk you care to consider, whether it’s property, a vehicle fleet or professional indemnity. Many businesses will right now be looking for every possible way to add revenue, reduce costs and generally protect the business.
We’ve gone from a brutal pandemic to what’s looking like a horrendous recession. Risk in all its forms has rarely been closer or more menacing, and yet actively mitigating that risk will be last on most to-do lists. Just a bit of attention now could mean the difference between a welcome safety net and a very hard landing.
Feel free to contact the Blackford Team for more information.
PHONE: 07377 181474