Dangers of Underinsurance

The 2007 summer floods have highlighted the need for businesses to check their sums insured are adequate. Many faced difficulty getting back up and running as a result of underinsurance where their claims payments were reduced or the absence of business interruption cover to cover their loss turnover or additional expenses incurred.

Over the past few years policyholders have been reluctant to increase their sums insured in an effort to keep premiums down. However, insurers can reduce a claims payment in direct proportion to any underinsurance flagged by loss adjusters, which in some cases could be as much as 50%. It is your responsibility to ensure you provide insurers  with accurate figures.

Businesses are more likely to suffer a flood than to experience a total loss fire but too few consider flood awareness a priority. Preparation can limit financial loss, stress and downtime  so makes good business sense. Here are some basic actions you can take:-

• Find out if you are at risk from flooding
• Develop an emergency plan to ensure staff safety and to protect property
• Make sure you are adequately insured
• Follow insurer guidance in the event of a flood.