Running a business takes time, money, and effort. The right insurance helps protect it when things go wrong. But how much business insurance do you really need?
As brokers, we can’t decide your sums insured for you. But we can guide you to the right advice so you get the right figure. Here’s a simple guide to get it right.
🎥 Watch our short explainer video:
What underinsurance means
Underinsurance is when your business insurance is set too low. It will not cover the real cost to fix damage,
rebuild, or replace what you own.
You won’t notice this when you buy the policy. You will feel it when you make a claim.
It often happens when:
You insure tools, machines, or stock at used prices, but you would need to buy new ones.
You pick a lower number to cut the premium, and it doesn’t match what your business owns.
Important: Deliberately lowering the figure to cut your premium is considered fraud.
Your lost-income cover ends too soon, so there isn’t enough time to re-open.
People forget extra costs like demolition, site clearance, shipping, specialist workers, and fees.
Note: Set the right cover amounts when you take out the policy. That avoids shortfalls later and stops you having to pay the rest yourself.
Why the right cover matters
If your cover is too low, your payout will be cut and you’ll have to pay the rest yourself.
That can cost thousands and delay your return to business.
Example:
- Your shop, stock, and fittings are worth £60,000
- Your policy only covers £45,000
- That’s 25% less than you need
- If you claim £10,000, the insurer pays 75% = £7,500
- You must find £2,500 to reopen
The right sums insured protect your business, staff, and customers.
Property insurance: what to check
Property cover should match the real cost to put things right today, not what you paid years ago.
Include:
Rebuilding your premises from scratch
Fixtures, fittings, and signage
Equipment and machinery
Stock at cost price
The best way to be accurate
Get a professional rebuild valuation. A professional valuation gives you a figure based on real local costs. It covers materials, labour, and all the extra expenses in a full rebuild.
Note: Be careful using online building calculators.
Many don’t factor in the Channel Islands or the hidden costs that can arise if the worst happens. A valuation is the safest way to get it right.
Business interruption insurance: why it matters
It’s not just damage that costs money. It’s also the time you can’t trade. This cover helps you:
- Pay staff wages
- Rent temporary premises
- Hire replacement equipment
- Cover lost income
Items often underinsured
Many businesses underestimate:
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Specialist tools and machinery
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Seasonal or high-value stock
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Fittings, lighting, and display units
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Stock or kit stored off-site
How to keep your cover up to date
Once you’ve bought your policy, don’t set it and forget it. Life changes, and your cover should keep up.
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Review your policy every year.
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Update cover when you grow or buy new equipment.
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Use today’s prices, not what you paid years ago.
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List high-value items separately.
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Get professional valuations for buildings, machinery, or custom fittings.
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Keep receipts, valuations, and inventories.
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