Posted on: 05 August 2020

Do your insurance policies cover you adequately?

In the FCA’s Thematic Review, it was estimated that up to 40% of UK businesses were underinsured. This means that the insurance policy doesn’t cover the insured party for the amount that they need in the event of an emergency and should they need to claim they could find themselves out of pocket and possibly out of business.

Research has shown that there are 4 commercial policy covers that are frequently underinsured, so take a look at what was identified to see if you need to revisit your business insurance policy.

The insurance covers businesses are most likely to underinsure infographic

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The most underinsured commercial policies summary

The 4 most common insurance policies that could have inadequate cover in the event of a disaster

1. Buildings insurance

Buildings are often underinsured because it can be so difficult to estimate the value of the building, which could be the entire rebuild cost, the cost of the bricks and mortar or damage to a section of the premises which could be caused by a falling tree or fire.

You should regularly review the value of your property and adjust your policy accordingly to ensure that you are adequately covered.

2. Contents insurance

Many organisations fail to provide a comprehensive list or correct valuations of assets on their contents policy.

Maintain an inventory log that is updated regularly so that you have a better idea of what you need to cover.

3. Business Interruption

Studies have found that 40% of UK businesses are underinsured for a business interruption, usually because of the indemnity period.

Calculating a realistic indemnity period can be difficult, so make sure that this period allows enough time to rebuild your business.

4. Cyber liability

Data has shown that only 11% of businesses have cyber insurance despite 32% of UK businesses experiencing a cyber-attack

Cyber insurance will not stop someone from attacking your digital systems, but it will help you rebuild your business following the attack.

How do businesses end up underinsured?

There could be many reasons why a business would become underinsured. These can be by accident or through negligence, but either way, the end result is the same.

Underestimating the amount of cover required

There could be many elements that a business owner could underestimate when it comes to insurance. Some of these things are underestimating the likelihood of a cyber-attack, how long it will take to get a business going again after a business interruption, the cost of replacing contents or even that a loss could happen at all.

When it comes to insuring your livelihood, it is better to be safe than sorry, and prepare your business for every possibility that your business could suffer from a major loss.

Not keeping a policy up to date

When it comes to renewal time, it is too easy to just let the cover roll over and not worry about it. However, hopefully your business will have grown throughout the year, meaning that you may have an increased value of assets or buildings or have taken on staff.

If you don’t get in touch with your broker or insurer to tell them about any changes to your business, you may become underinsured, as the cover levels may not be sufficient to cover your business after growth.

In most cases, Employers’ Liability is a legal requirement, so if you have taken on staff since your last policy, you must get in touch with your broker or insurer to arrange this cover.


In an attempt to try and lower an insurance premium, business owners could downplay the level of cover that they think that they will need.

Whilst this could lead to a short-term gain of a cheaper insurance premium, if you were to suffer a loss, it is likely that you will not receive the adequate support to cover you.

Business insurance with Premierline

As a business insurance broker, Premierline will assess your insurance needs and offer advice that suits your company, making sure that your insurance meets the needs of your business.

We know that all businesses are different, so speak to one of our insurance experts who can provide insurance advice and will find you a competitive no obligation quote from some of the UK’s most well-known insurers.

Source: Zywave inc. – Infographic: The 4 Most Commonly Underinsured Commercial Policies

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