BizCover urges small businesses to review their business insurance ahead of summer
The ‘silly season’ is the biggest time of the year for many small businesses. But with their minds on increased summer trading, small business owners may be overlooking a key risk: underinsurance.
“Underinsurance is more than just an industry buzzword,” says Brad Miller, General Manager of BizCover, Australia’s leading small business insurance platform. “For many small business owners, underinsurance could mean the difference between staying in business or being forced to close up shop.”
Defined by the Insurance Council of Australia as not having “enough insurance to cover the replacement value of the items you’re insuring”, underinsurance is common in Australia. However, many small businesses may not realise how devastating underinsurance can be.
A 2022 survey of Australian small and medium businesses by insurer Vero, found that only 43% of respondents thought they were completely covered. Just over half (51%) said they were mostly covered, while 6% admitted they were only partially covered.
Alarmingly, over one-third (34%) of the business owners who were either mostly or partially covered had no alternative plan if the worst were to happen to their business. Another 20% said that a negative event would mean selling, shutting down or temporarily closing their business.
Christmas trading may increase risks
Underinsurance is a year-round issue for small businesses but may be more pressing during the silly season rush.
Summer trading is not business as usual for many businesses. Changes in how they operate from November to February may increase risks or create new ones.
“A classic example is a retail shop storing more stock in the lead up to Christmas,” says Miller. “If a fire or storm damages your retail stock, you could be out of pocket replacing it without the right type of insurance—in this case reviewing or adding appropriate Contents cover to a Business Insurance Pack.”
Small businesses may also want to check that other policies are still current. Public Liability insurance is typically required to lease a commercial premises, but it’s not unheard of for business owners to accidentally let these policies lapse.
Helping small businesses battle underinsurance
While underinsurance may be widespread amongst Australia’s small businesses, correcting it can be easy.
By thinking about their business—such as how it operates, what activities or products it offers, and their industry—small business owners can begin to decide what types of insurance may benefit their business or might be required for them to trade.
Reviewing your insurance cover today may save you from being underinsured tomorrow.