Don’t be underinsured like everyone else is

The SME community is notorious for not having the right amount of business insurance in place. Not only this, but the prolific trend toward underinsurance for small businesses is not always due to ignorance on the part of their owners.

Somewhere close to 40% of small business owners are fully aware that their insurance doesn’t properly cover them according to DVL Smith. With this admission, it’s hard to understand what the point is for these business owners having insurance in the first place.

It’s widely understood that the cheapest insurance policy is not always the best one in the majority of cases. Borrowing car insurance for a quick analogy, third party fire and theft will be cheaper than comprehensive, but will not necessarily be an appropriate cover for you.

At any point in the running of your business, you always need to be questioning your expenditure. If you find you are paying for something which isn’t necessary, then you stop paying for it, but if you find something that isn’t working because you’re not paying enough for it, then you should be seriously considering injecting a little more cash into it.

If you’ve taken out insurance then you’ve at least acknowledged its value at some point along the line and that puts you a step ahead of several business owners who have neglected to even make that jump. You’re even further ahead again of the ones that can’t think of any risks their businesses face in the first place. Without making sure you’re adequately covered however, it’s pointless. If it’s employers’ liability that you’re underinsured for, not only is it pointless but it might even result in a punitive fine.

For all my posturing of asking what the point is of being underinsured, it’s easy to see how it can happen. In some cases the business might have grown faster than its owner can really keep up, or perhaps having picked up insurance in the first place has simply ticked off another checkbox in your mind of things you need to keep on top of. Don’t let your brain trick you into thinking you’re done with something if you know that you’re not and if you’re not sure if you have enough insurance or not, then maybe place a slightly higher priority on keeping track of it. A safety net is after all utterly useless if it isn’t tied to anything.

Written by David Hing, YOUR Insurance blog editor. YOUR Insurance specialises in public liability insurance for the SME community.

Posted by on Nov 16 2012. Filed under Small Business. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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