Many businesses take comfort in knowing they have insurance in place. Unfortunately, many businesses find that over time their insurance cover no longer accurately reflects their current operations, assets or risk exposures.

One of the most common issues encountered when claims arise is underinsurance. Assets may have increased in value, additional equipment may have been purchased, stock levels may have grown, or the business may simply have expanded beyond the original assumptions used when the policy was arranged.

Growth is often one of the biggest contributors to underinsurance. A business that has invested heavily in equipment, increased stock holdings or expanded operations may unknowingly be carrying sums insured that no longer reflect replacement costs.

Insurance is designed to respond to the information provided by the insured. If sums insured are outdated or assets are not correctly declared, a business could find itself facing a shortfall at the very moment it needs financial support most.

Another common misunderstanding relates to business interruption cover. Many business owners understand the importance of insuring their buildings, plant and stock, but underestimate the financial impact of a prolonged interruption to operations following a fire, storm, theft or other insured loss.

Insurance should not be viewed as a document that sits in a drawer until renewal. It should evolve alongside the business, supported by ongoing engagement with the business’ broker. Changes to premises, equipment, turnover, contracts, staff complements or operational activities can all have an impact on the suitability of cover.

The objective is not simply to be insured. It is to ensure that the cover in place accurately reflects the risks the business faces today.