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It is advisable to have your insurances, such as business liability insurance and home insurance, checked annually. As an entrepreneur, you are constantly developing and both your company and the environment in which you operate are constantly changing. This also changes the associated risks, so it is unwise to assume that your insurances are still fully adequate. In practice, underinsurance is more common than people think and can have significant financial consequences in the event of damage. In this blog, you can read what underinsurance is, how it occurs, which business insurances are common and how to prevent your company from taking unnecessary risks.
Underinsurance means that the amount you are insured for is less than what your assets or turnover are really worth. If there is damage, you will only be reimbursed for part of the damage. So you bear the rest of the burdens yourself.
Example: your business premises are insured for an old rebuild value of €1,000,000, but in reality, this should now be €1,200,000. If there is damage, you will only receive part of the amount from your home insurance. You also often see this with machines: they are insured by your machine breakage insurance at the current value, while you have to pay the new value if you replace them.
Underinsurance often occurs without you even realizing it. For example, if your company is growing but you are not adjusting business insurance. Or if you assume an old valuation. It also happens that entrepreneurs mainly look at the premium, and less at what exactly is insured. And the policy conditions for home or business indemnity insurance are sometimes so complicated that important details are missed. That is why it is wise to let an experienced and independent advisor from Van Loon take a look.
Especially in sectors such as construction, logistics, technology, healthcare and business services, underinsurance is looming. A lot is invested in these sectors and things often change within the company.
Every day, Van Loon helps entrepreneurs in Rotterdam, Den Bosch, Breda and The Hague, among others, to properly cover these types of risks with business interruption insurance or inventory and goods insurance.
Home insurance covers damage to your business premises, for example due to a fire or storm. However, if the insured amount is based on an old rebuild value, you will only get part of the costs back from this home insurance in case of damage.
💡 Hint: Have a new valuation carried out once every six years or when the building has been renovated or modified. This is how you base your coverage on facts.
Did you buy new equipment or expand your inventory but didn't pass it on or no flexibility in your policy? Then there is a good chance that in case of damage, you will not be reimbursed for everything from inventory and goods insurance. You will only get part of the costs back, you will have to pay the rest yourself.
💡 Hint: In case of extensions, always contact your advisor immediately.
Business indemnity insurance covers your fixed costs and loss of turnover if you are temporarily unable to work. But if your turnover is estimated lower or the payment period is too short, you will still miss out on income.
💡 Hint: Check how long your company can go without turnover and have your benefit period adjusted accordingly.
If your business activities change, you must report this to your business liability insurance. Otherwise, there is a good chance that claims for damages will not be reimbursed or will not be fully reimbursed. Consider, for example, a company that, in addition to advice, will also do assembly.
💡 Hint: Always report changes in your work to your advisor immediately. Your advisor will have this covered in your business liability insurance.
Machines must be properly included in the machine breakage insurance, with the correct value. If you haven't done this, you often won't get enough back to replace or repair the machine in case of damage.
💡 Hint: Always report new machines immediately and check whether they are insured based on the new value.
Answer these questions for yourself:
If you answer “no” or “I don't know” to one or more questions, it's smart to have your situation reassessed.
At Van Loon, we look beyond just the premium. We mainly look at what is really insured and whether that suits your company. We do this, among other things, with:
We work for companies in Den Bosch, Rotterdam, Breda, The Hague and Rijswijk, among others, and are active in various sectors. We know exactly where your risks lie and how to limit them.
Underinsurance is no small risk. One damage can have major financial consequences. Therefore, have your business insurances checked in time.
👉 Schedule a free insurance check with Van Loon and find out whether you are well insured or are running unnecessary risks.