Business Insurance Blog

December2014

Business Insurance – Are you Underinsured?

New research from CGU has revealed that underinsurance is potentially a serious risk to the sustainability of many small businesses with many operators facing devastation if they suffer a major setback or loss.

The research, carried out in partnership with loss adjusters McLarens Young International, reviewed actual levels of underinsurance – not just business perceptions of the problem.

December2014

What is Business Interruption Insurance?

To put it simply, Business Interruption insurance protects against loss of profit resulting from an interruption to your business activity. Interruption to your business activity has to be caused by an insurable event such as Fire, Storm, Accidental Damage, Machinery Breakdown or other events you are insured against as stated in your business policy.

Common problems suffered by businesses as a result of interruption include:

  • loss of profit margin on stock destroyed;
  • non-fulfilment of standing orders;
  • breaking of contracts and / or loss of customers to competitors;
  • certain continuing expenses, for example, rent, payroll, interest;
  • additional expenditure in order to minimise loss of income, like rental of temporary operating premises, or working additional shifts;
  • the availability of replacement plant and machinery or parts for damaged plant and machinery;
December2014

Business Insurance – The Risk of Under-Insurance

Apart from the obvious risk of not insuring your business assets for full replacement value, an additional risk lurks in the fine print of your business insurance policy. The clause I am referring to is generally called an “Under-Insurance” or “Co-Insurance” clause.

It’s a difficult clause to explain, and I do recommend you refer to your policy wording for worked examples, however the general provision of the clause allows the insurance company to only pay a percentage of a claim in the event your business is under insured.