Home Leeds Towergate Insurance Brokers joins push to protect SMEs from underinsurance risks

Towergate Insurance Brokers joins push to protect SMEs from underinsurance risks

Towergate Insurance Brokers joins push to protect SMEs from underinsurance risks

Towergate Insurance in Leeds has joined an industry-wide push to warn SME owners that they could be at risk of underinsurance.

The issue could affect up to 80% of business owners, who could receive far less than they need to restore their business when they need to make a claim, leading to potentially devastating results.

Towergate is today issuing advice for business owners who could have false confidence in their policies, highlighting issues such as the absence of business interruption cover or up-to-date risks like cyber attacks.


“An alarming degree of underinsurance”

According to a study conducted by the Building Cost Information Service, part of the Royal Institution of Chartered Surveyors, up to 80% of small businesses in the UK could be without adequate cover.

The Financial Conduct Authority’s study in claims made by SMEs * found what it termed a “significant number of instances” of cover being too low. Some 20% of the claims over £5000 which it examined did not provide enough cover for the actual loss the business had suffered.

The British Insurance Brokers Association has described the situation “an alarming degree of underinsurance.”

Commercial property owners are also thought to be underestimating the cover they require by a considerable amount. A study of underinsured businesses in 2015 revealed that more than four out of five underinsured their commercial property by an average of £486,000. **

Meanwhile government has found that only 37% of businesses have some form of cyber security insurance ***, despite the fact that two-thirds of large UK businesses had been hit by a cyber breach or attack in the past year. The average cost of a cyber attack to a business with more than 250 employees in the UK is some £36,500 with the most severe attacks costing millions. For smaller businesses of between 50 and 249 staff, the average cost of a cyber breach was £847