In the business world, no two enterprises are exactly alike, even within the same sector, with each company possessing its own set of unique challenges, operations, and risks.
Recognising this individuality is crucial, and businesses should prioritise customising their insurance policies rather than opting for generic coverage.
For instance, a commercial combined policy might incorporate various built-in and tailored sections to cover specific needs such as material damage or building ownership.
Customisation doesn’t stop there; it extends to critical areas like business interruption coverage, where the indemnity period is adjusted based on the specific circumstances of the business. Some businesses, for example, might need coverage that extends beyond the standard 12 months, and as the broker we stress the importance of understanding and addressing these unique needs.
Other policy sections, such as the ‘money’ section, can be tailored based on the amount of cash a business has on its premises. Public liability coverage may also need adjustment related to your unique needs, with some businesses requiring higher indemnity levels than the standard £2-5 million. Similarly, material damage coverage is another area where customisation is vital, considering that no two businesses have identical sums insured.
To illustrate how a generic policy can fall short, consider a scenario where a property fire results in a total loss, necessitating a two-year repair period. A generic policy might only extend coverage for one year of interruption. This shortfall could prove to be a substantial risk for businesses, highlighting the critical need for tailoring insurance coverage to address specific risks and potential scenarios.
As brokers, we emphasise the importance of considering delays such as securing tradespeople during the recovery phase. It’s about understanding the ripple effects of damage, not just the immediate impacts.
Businesses need to factor in all possible contingencies to ensure comprehensive coverage is in place to safeguard against unforeseen challenges. By adopting this nuanced and personalised approach to insurance, they can proactively protect themselves and their interests in the face of unexpected challenges.
With today’s economic challenges, we understand that cost-consciousness is key when running a business, but we warn against underinsuring to cut costs, for many reasons. Insufficient coverage can lead to penalties, as insurers may apply an average if the insured amount is deemed inadequate. Being correctly insured is always preferable and encourages businesses to consider the long-term consequences of cutting corners on insurance costs.
Policies can also be adapted to reflect changes in your business. For example, if your business experiences rapid expansion or reduces operations — mid-term adjustments can be made. Open communication with your broker ensures that your insurance policies remain aligned with the evolving needs of our business.
Businesses should engage in meaningful conversations with experienced insurance brokers who delve into the individual needs of your business, using a personalised approach to ensure you are adequately insured.
Being under-insured is a risk no business should take, especially when the level of coverage can be the difference between recovery and significant loss in the face of unforeseen events.
- Katherine Medwell is commercial account executive at AbbeyAutoline (www.abbeyautoline.co.uk).