Many small and medium-sized enterprises (SMEs) only discover they’re underinsured when it’s too late—when a claim arises. At that point, having the wrong cover in place can be the difference between a temporary disruption and permanent closure.
Robust insurance cover isn’t just a “safety net”; it’s a cornerstone of effective risk management. A single uninsured event—such as a fire, flood, cyber-attack, or critical equipment failure—can cause severe financial disruption and, in some cases, threaten long-term survival. Yet, despite these risks, underinsurance remains one of the most overlooked vulnerabilities among SMEs.
Common Causes of Underinsurance
Several factors contribute to this widespread issue, including:
- Outdated property valuations – failing to update the value of buildings, equipment, or inventory.
- Business growth without policy updates – expanding operations without updating insurance cover.
- Misunderstanding policy terms – assuming cover applies when it doesn’t.
- Focusing solely on premiums – chasing lower costs without considering reduced protection.
- Neglecting emerging risks – overlooking cyber threats, climate-related events, and supply chain disruptions.
The Consequences for SMEs
The impact of being underinsured can be severe:
- Partial or denied claims leave businesses carrying costs themselves.
- Prolonged downtime if business interruption cover is inadequate.
- Legal and regulatory exposure when liability cover falls short.
- Reputational damage caused by an inability to meet customer obligations.
In short, underinsurance doesn’t just affect finances—it threatens resilience, reputation, and long-term stability.
How SMEs Can Protect Themselves
To avoid these risks, businesses should:
- Regularly reassess insurance cover following growth or operational changes.
- Obtain professional valuations of property and assets, especially during inflationary periods.
- Review whether current policies account for new and emerging risks.
- Work with a knowledgeable broker who can identify gaps and tailor policies to the business’s evolving needs.
At Baldersons Insurance, we work closely with SMEs to ensure they’re not left exposed. Regular reviews, clear explanations of cover, and tailored solutions mean businesses can focus on growth—knowing they’re properly protected.
If you haven’t reviewed your insurance recently, now is the time. Contact us today to arrange a no-obligation business insurance review.
