62 percent of SMEs said they are unlikely to have the right insurance in place to protect their business, in the recently released QBE SME & Insurance Pulse Check Report.

The report surveyed over 600 Australian SMEs on their insurance habits. The results revealed that if faced with a claim, a majority of SMEs would likely run up large personal debts to pay these, with 33 percent admitting to simply not knowing where the money would come from or how they would finance the gap in legal costs.

Of businesses that are insured, half of these are insured for only 60 to 85% of Replacement Value. And it gets worse with the revelation that between 17 to 25% of ALL small businesses are underinsured and risk business failure following a serious insurable event.

The most alarming part of Underinsurance is that it’s predominately discovered at the time of a claim or loss, which by then is too late to rectify. This has been demonstrated on many occasions over recent years following major events such as floods, storms, bushfires, and cyclones.

Underinsurance may impact a wide number of General Insurance Products, including but not limited to:

  1. Home & Contents Insurance
  2. Commercial Motor Vehicle Insurance
  3. Strata Insurance – both Commercial & Domestic
  4. Business Insurance
  5. Industrial Special Risks (ISR) Insurance
  6. Marine Insurance – both Leisure & Commercial Hull
  7. Transit Insurance
  8. Liability Insurance

Under some Policies there is also Policy ‘Sub Limit(s)’ in areas such as 1) Removal of Debris; 2) Reinstatement; 3) Extra Costs of Reinstatement; 4) Business Interruption; 5) Care Custody and Control… and all need to be considered when tailoring specific insurance contracts.

That is why it’s imperative and prudent to constantly review your Policy Limits and sub-limits as part of an on-going risk management strategy. This shouldn’t just occur at Policy Renewal as asset value increases, renovations or upgrades, etc., may have occurred during the Policy ‘Insurance Period’. These reviews should be done in consultation with your insurance professional to ensure your Limits of Coverage are adequate. Don’t wait until you make a claim to find out they are not.

To get you started here is a handy calculator to estimate the cost to rebuild your house (if anything should happen to it)  >> https://understandinsurance.com.au/calculator/building-calculator

It’s a sensible approach to discuss Policy Limits following any purchases or disposal of assets and sound practice to ensure that your level of coverage represents a minimum of Replacement Value.

Remember, it’s too late once a claim occurs to say, “I should have phoned my Broker to discuss….”

Call your personal insurance expert at Rivers Insurance for 07) 3028 9494


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