Are you confident that your business is adequately covered in the case of a misfortunate event, an accident or loss?

Business insurance is an industry and community problem. Many small and medium Australian businesses risk financial hardship as a result of being underinsured or having no insurance at all.

Underinsurance is a situation where the existing insurance coverage is inadequate.

There are many reasons for underinsurance, such as owners not having enough understanding of the insurance policy and a tendency to cut corners to reduce their overhead cost. An inability to afford the premium, purchasing insurance based on price rather than coverage, the cost of obtaining a formal valuation - these are just some of the key factors that lead to underinsurance or non-insurance.

A survey from a leading insurer on small business insurance cover shows that 65% of small businesses have no business interruption cover, 47% do not adequately insure their stock and contents and 82% who own their business premises do not insure them properly.

Lack of adequate business interruption cover has become a major concern and the benefits of having adequate insurance are clear - business interruption insurance allows a business to get back on its feet by providing cover for cash flow after a business suffers from a major accident or loss.

Growth of a business is another circumstance which is often overlooked from an insurance point of view. As a business grows, a re-evaluation of insurance needs should also be considered. To ensure the right amount of coverage, business owners should obtain valuations on their buildings, stock and contents. Then, in the event of a claim, one will be confident they are insured for the full replacement value of insured goods.

Many proprietors who own their business premises are most likely underinsured - micro and home based businesses in particular - for many owners rely on their basic home and content insurance policy believing that this will cover their business operation as well. This is usually not the case.

Most small businesses have no idea they are underinsured or even have the right cover until it's unfortunately too late. More than 70% of underinsured and non-insured businesses that suffer a major event, such as fire, fail within a year.

Don't wait until you experience a major loss to look into your insurance policy - feel confident that your business insurance will cover you from unknown disasters.

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