Business insurance pitfalls

August 8, 2014 6:30 am

We work with many businesses who have suffered a disaster and need to claim on their insurance. All too often they face problems caused when taking out or when renewing their insurance cover.

A recent article on summarises really well the sort of issues that can arise and how to avoid what it calls the eight most common insurance mistakes businesses can make. These are:

  1. No regular review of insurance policies: businesses develop over time and what you needed one year may be completely inappropriate the next.
  2. Not seeking guidance from your broker when selling to different markets: particularly in today’s global marketplace.
  3. Under-insuring their business – not having the right level of business interruption insurance: all too often businesses under-estimate the time it can take to start trading again after a disaster.
  4. Not obtaining evidence as soon as an incident occurs: this could reduce the likelihood of making a successful claim.
  5. Misunderstanding the definition of gross profit: it needs to include the net profit the business cannot earn as well as the costs it will continue to incur while it’s not trading.
  6. Reducing cover when times are tough: this can lead to difficulties should the worst occur.
  7. Not understanding endorsements and warranties: this is a complicated area and should be clearly explained by a broker.
  8. Being your own insurance broker: in other words, don’t rely on Google!

These are exactly the kind of issues we have helped many businesses with over the years when they’ve had to make an insurance claim. Business insurance is a very complicated matter and the way a claim is handled can make all the difference between that business surviving or not. Our clients know the difference it can make having a professional working on their behalf.