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Is Your Business Overinsured or Underinsured?

In the case of a fire, flood, or other unforeseen tragedy, how much would it cost to rebuild your business? Isn’t that what your insurance policy is for? But, if the worst happens, can you declare with certainty that you have appropriately estimated the cost of reconstructing your business?

What is the scope of the problem of underinsurance?

According to the Chartered Institute of Loss Adjusters (CILA), up to 43% of business interruption plans are underfunded, with the average deficit being a whopping 53%.

According to research conducted by the Royal Institute of Chartered Surveyors and the Building Cost Information Service, up to 80% of firms in England and Wales have some kind of underinsurance on their commercial premises. In addition, the quantities covered frequently appear to fall 20% short of appraisals, according to the study.

Regardless of how you look at it, it’s a lot of money that might be lost if a claim is needed. When you add in Cytora’s findings that a quarter of SMEs would have to close if they were hit with a £50,000 bill out of the blue, the scale of the underinsurance problem becomes alarmingly evident.

Man counting pennies on a table

What are the most typical business insurance policies that are underinsured?

Indeed, any commercial insurance coverage might be underinsured; nevertheless, certain sectors are more concerning than others. The four most typically underinsured business plans are shown below.

 

  • Buildings – Business owners must examine the worth of their property on a regular basis and make the necessary changes to their business insurance policy. A firm might find itself underinsured and unprepared for even minor losses if these continual modifications are not made.
  • Contents and equipment – There will be inaccuracies in the insurance amounts for a firm’s contents and equipment unless there is a full inventory of business property assets on a policy or an insurer is provided an accurate assessment of those goods. Make sure you have a current inventory of all on-site equipment and items in a validated asset management system — this is the only way to ensure you’ll be adequately insured in the event of a claim.
  • Business interruption – It is believed that 40% of UK SMEs do not have enough business interruption insurance. Insufficient indemnification periods are a major factor for this. You can maintain business continuity by determining a reasonable indemnity period that allows your company adequate time to recover after a loss (anything between 18 and 24 months).

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    Stay in control of your tools & equipment and Get in touch today.

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    Benefits of CASM’s Asset Tracking Software

    Fixed Asset Tracking with CASM to help your business.

    Customisable dashboards

    Our fixed asset management software features highly customisable dashboards for a 360-degree view of all your physical assets. A cloud-based single pane of glass customisable dashboard for Organisation, Branch, or department.

    Easy to Use Reporting

    Reporting, High Level, and Granular reporting on every detail of your Physical assets. Our reporting system includes everything your business will need to track your fixed assets.

    Depreciation and Disposal Management

    Depreciation and disposal management and reporting of your physical assets. Learn when your fixed assets aren’t working for you so you can dispose of them at the correct time. The best way to save your business money.

    Contract and Warranty Management

    Contract and Warranty management, link your Physical Assets to warranty and maintenance contracts. When your business has thousands of physical assets, knowing when the warranty runs out or the contract ends is extremely important. This saves you money and time.

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