5 Ways to ensure that you are not underinsured (or overinsured)
Underinsurance and overinsurance can severely impact your overhead expenses
Underinsurance is a common occurrence for many businesses who do not take the necessary time to reassess their insurance policies regularly. Here are a few ways to ensure that you are insured for the right amount and don’t end up disappointed if you do have to make a claim:
1. Ensure your assets are insured for accurate sums
The value of your assets is bound to fluctuate between annual insurance terms. For this reason, it is necessary to take regular stock and ensure that you have an accurate sum insured so that your claims do not fall short of the value of your assets. Furthermore, being overinsured could mean that you are paying too much in monthly premiums, which means that you get less out than you are paying for.
2. Determine full costs of recovery
Unconsidered additional costs may be applicable in the event of loss, damage, or theft. For instance, structural damage to property will include more than material costs, like architectural costs, labour costs, attorney costs, or more. Ensure your sum insured includes all costs necessary to recover.
3. Ensure that your indemnity period correlates with your risk profile
When you opt for a longer indemnity period, you may be limited in the amount paid out for your claims in the short term. However, longer indemnity periods can be a helpful tool for longer recovery periods under the business interruption section of your policy.
4. Beware of your limit(s) of indemnity (LOI)
There may be limits to the total amount(s) you can claim for any one incident, or the maximum you can claim in an insurance term (or sub-division thereof). If your LOI does not allow it, you may have to make substantial co-payments for large claims.
5. Ensure that there are no gaps in your insurance
Insurance gaps come in many forms. You may be insured for one type of incident, but not for another. If you have undergone an in-depth risk assessment, it is much easier to identify lacking cover in your insurance policies. Specialist risk insurance may be required to fill the gaps specific to your industry.
For more information, or to reassess your insurance policies to ensure that you are not underinsured (or overinsured), please contact your risk manager who will help you make the right decisions.
Although all possible care was taken in the drafting of this document, the factual correctness of the information contained herein cannot be guaranteed. This document does not constitute advice and anyone planning on taking any financial action based on this document, is strongly advised to first consult with their personal financial advisor. ProVérte Risk Management is an authorised financial service provider with FSP no. 51584.