Insurance is a key purchase for businesses and getting the right amount of cover is critical for your customers. Finding out at the point of claim that cover is insufficient and that they are underinsured, can have devastating consequences.
Here are 10 things you could consider with your customers to help them avoid being underinsured.
1. Raise awareness
2. Encourage regular property valuations
3. Check rebuilding costs
4. Got everything covered?
5. Check the indemnity period is sufficient
When calculating indemnity periods, your customers should to bear in mind that 24 months is likely to be the minimum period needed for a business to fully recover after an event.
Our recent survey* showed that on average respondents expect it would take just over nine months to get their business back and running to its current level if their property were to incur fire damage.
When setting indemnity periods, customers need to take into account the higher energy prices, increase in material costs, current price inflation and shortage of skilled tradespeople to ensure that they are covered appropriately if things go wrong.
6. Encourage business continuity plans
Given the uncertain times many businesses have faced over the past few years, it’s important for them to regularly assess their limits of liability and develop a business continuity plan.
Creating a plan can help identify gaps in cover and identify emerging risks such as cyber, which businesses must think about.
7. Explain sums insured
8. Are customers aware of indexation and rate strength?
Whilst both of these factors increase the cost of insurance for a customer, they’re applied for different reasons. Insurers apply rate change to reflect any changes in the cost of underwriting business from one year to the next, whereas indexation takes into account the change in the various costs associated with reinstating a business to the position they were in prior to any claims being made.