The Importance of Avoiding Underinsurance: A Guide for Our Clients

At the heart of everything we do as your commercial insurance brokers is one simple truth: your protection and peace of mind come first. We know running a business is full of challenges, and the last thing you need is an insurance hiccup when things go wrong. That’s why we want to talk about something that can sometimes sneak up on people – underinsurance. It’s more common than you think, but the good news is, we’re here to help you avoid it.

What Exactly Is Underinsurance?

Let’s break it down. Underinsurance happens when the amount you’ve insured something for (like your property or stock) is less than what it’s actually worth. So, if you have to make a claim, the insurer might not pay out the full amount you’re expecting, leaving you to cover the rest. For example, if you insure a building for 75% of its value, you might only get 75% of a claim, even if you lose everything.  We know this can sound a harsh and nobody wants to be in this position, but that’s why we’re here—to make sure this doesn’t happen to you!

Why It’s Such a Big Deal

Picture this: a major incident happens—whether it’s a fire, flood, or something else—and you make a claim expecting everything to be covered, only to find out your policy doesn’t quite cover the full value of what you’ve lost. It’s a nightmare scenario, but one that’s preventable with a little attention upfront.
It’s not just about the property. Underinsurance can also hit things like liability, contents and business interruption cover.  We don’t want that for you and we are here to help!

Here’s How We Can Help

We’re all about making sure you’re properly covered, and we do that by working hand-in-hand with you, your insurers and expert valuers to make sure you have the right sums insured. Here’s what we offer:

1. Friendly, No-Stress Policy Reviews: We’ll take a look at everything, from your building to your stock and machinery, making sure your sums insured are accurate. We’ll also help you account for things like depreciation or changes in value, so nothing slips through the cracks.

2. Valuation Services: We know the right people to call if you need professional valuations, especially for properties and machinery. These experts give you a clear, up-to-date picture of replacement costs, so your insurance reflects reality. Just ask us, and we’ll put you in touch with the right people.

3. Regular Check-Ins: Life and business change, and so do your insurance needs. We recommend keeping things fresh with regular reviews. This way, if your assets increase in value or something else shifts, you’re always properly insured.  We understand that the needs of every business is different but, if you want to see us or have a query just let us know and we’ll be there.

4. Tech-Savvy Insurers:  Some insurers are now using smart tech to spot potential underinsurance before a claim even happens and the use of this technology will only increase. Using algorithms and data, they can identify where your sums insured might be off. This is effective because it means you can adjust your cover proactively and avoid any nasty surprises down the line.  We really hope it becomes standard practice for every insurer.

5. We Keep You in the Loop: Our job isn’t just to sort out the paperwork. We also want to make sure you understand why having the right sums insured is so important. We’ll explain things in plain English (no jargon, we promise!) and make sure you’re confident about your cover and that it’s in the right place.

Got Questions? We’re Here for You!

This is the important part.  If you’re not 100% sure about your current sums insured, don’t stress. Just give us a call or drop us a line, and we’ll walk through it together. We’d much rather help you sort things out before a claim happens, so you don’t end up in a difficult situation.

Your business is our priority, and we’re always here to help make sure you’ve got the protection you need. So, let’s chat and make sure everything’s in place, giving you one less thing to worry about! 

Call your usual contact at Park, or one of the team here.