A recent article, written by Aviva, one of our insurer partners has highlighted some startling figures on commercial insurance among businesses in the UK. Whilst your insurance may not be held by Aviva, the risks identified are likely to be reflected across many organisations and could be relevant to you and your care home.
You might not be aware, but underinsurance is often seen amongst small to medium sized businesses, and the pandemic has only intensified the threat. The reason for this is that to ensure long term survival, many businesses made changes to their operating models, which have not been reflected in their insurance cover.
According to Aviva’s data¹, only 20% of small and medium businesses had their policies changed in line with their new business models. This could mean that in the event of a claim, they may not receive the appropriate level of cover they now require, putting their business at unnecessary risk.
Are your Sums Insured at the right level?
They also noted that one in four firms had not made a material change to at least one Sum Insured in the last four years. The Sum Insured is the maximum amount of money that your insurance company could pay out in the event of a covered loss. With costs increasing in the construction industry, in raw materials as well as labour, checking your building sum insured is a great place to start.
Consider Business Interruption cover
Further, they identified that 40% of clients with Business Interruption insurance did not have an adequately set indemnity period. This is the maximum length of time your insurance company is obligated to make payments to cover the losses insured under the policy. When the maximum indemnity period has been reached, then claim payments will cease.
Business Interruption insurance covers your operational costs in the event of a crisis. If your business suffered a total loss claim, you need to consider how long you would need the cover to last whilst you rebuild or relocate. As a care home owner or operator, following a total loss event, the cover period required is likely to be long, as you’ll need to rebuild or refurbish your property. You will also need to relocate your residents whilst this is happening, which may also result in a temporary change in staffing and supplier requirements.
When cover is not reviewed regularly and doesn’t reflect new operating models, your business may be at an increased risk from gaps in cover and underinsurance.
Is it time to review your insurance?
There is no time like the present to take some time to review your insurance cover levels. With so much economic uncertainty driven by the pandemic and Brexit, we would advise making sure your risk management plans are firmly in place, which includes adequate insurance.
You should talk to an experienced broker who can help you to take a look at the bigger picture and ensure that you have the right insurance in place for your specific needs. As an independent commercial broker, with access to a wide panel of A rated insurers, we can advise on what’s right for your business, bringing you peace of mind. We’re here to help you and your business succeed.
Barnes Commercial Insurance Broker