Underinsurance means the level of insurance you have is not enough - and so it won’t offer the level of financial protection you need.

All businesses are open to risk if they don’t have the correct level of insurance for their needs and may be at risk of financial hardship as a result.

Here are some considerations SMEs can take to help avoid being underinsured.

Property Owners need to be aware that the current valuation of their property will likely differ from the cost to rebuild it. The amount insured should take into account any rebuild costs, including:

• any clearance/removal of debris,
• the cost of materials and if any specialist materials are required,
• cost of labour,
• any professional fees,
• whether the building is listed

• where a business is in a historic or unusual building that may take longer to rebuild or has specialist equipment that can take time to replace.
• issues around an extended supply chain, which may lead to rebuild times, as well as sourcing replacement items. Especially as supply chain disruptions are set to continue throughout 2023. ⁴
• the impact of labour shortages
• that accountancy and insurance policy definitions of annual gross profit are different. Businesses need to make sure their assessment of gross profit matches the one in the policy and that it's not understated.