How much business insurance is enough?

Are you underinsured?

When it comes to business insurance it’s important to make sure you have the right level of coverage. This will depend on the type of business you have, and the risks associated with it.

Property Insurance

Insuring your business premises, fixtured and fittings, business equipment and stock protects your business from losses caused by theft, fire or flood. It is important to regularly review your sums insured to ensure that your property is insured for the correct amount.

Business Interruption Insurance

This cover protects your business against the knock-on effects and additional costs of incidents that stop you from working. Underestimating the sum to be insured, and the indemnity period, could lead to a significant financial shortfall following a business interruption event, potentially leaving your business in financial difficulty.

What is underinsurance?

Underinsurance occurs when you do not have enough coverage to meet your needs. This can be a problem if you need to make a claim, as you may not receive the full amount of your losses.

For example, if you own a small retail store and you have a fire that destroys your building and all of your equipment and stock and you had a business insurance policy with a sum insured of £100,000, but the cost to rebuild your store and replace your property is £200,000, you are underinsured by £100,000 and will have to pay for the remaining costs out of your own pocket.

What happens if I am underinsured?

Under insurance exists when the amount(s) specified in your policy are not enough to cover the full cost of rebuilding, repairing, or replacing your insured property. Being underinsured will result in you being out of pocket in the event of a claim, since any claim could exceed the maximum amount that would be paid out by your policy.

There is also the ‘average rule’ insurers use to calculate claims to consider. It means if you are under insured, your Insurers can reduce the amount they pay in the event of a claim by the same proportion that you are underinsured, reducing your claim settlement amount further.

The only way to avoid this is for you to conduct a regular review of your sums insured and take a realistic view on whether the level of cover you have is enough to allow for a worst-case scenario.

What trades do we insure?

At islands we insure:

Tradesman & Building Contractor Insurance

Find out more

Small & Medium Business Insurance

Find out more

Professional & Specialist Risk

Find out more

Private Health & Group Travel

Find out more

Farmers Insurance

Find out more

Request a callback

Due to recent events, we are currently experiencing a very high volume of calls in the claims department. For more information, please visit our Storm Support Hub.

Need help? Get in touch!

Our friendly team is ready to help with any questions or support you need. You can contact us at any of our local offices:

Alderney Office
Open: Monday - Friday 08:30-16:30 T: (01481) 824 100
Guernsey Office
Open: Monday - Friday 09:00-17:00 T: (01481) 710 731
Jersey Office
Open: Monday - Friday 09:00-17:00 T: (01534) 835 383

Our expert advisors are here during office hours to chat about what you need and find the best solutions for you. If it's outside these hours, just leave us a message. We'll get back to you as soon as we can.

Please select your location

To provide you with a tailored travel policy, please select your island below to be taken to the appropriate quote form.

Guernsey / Alderney