SMEs are taking business insurance cover more seriously since the Canterbury earthquake according to Business Mentors patron, TOWER Insurance, one of the country’s oldest providers. However, despite the increase in queries, TOWER claims that there are still too many companies that are inadequately insured and could be at risk if another disaster hit.
The statistics are not encouraging. At the Business Mentors AGM this month, TOWER announced that around one in five small businesses may have no cover at all and a third of those that do insure their assets are severely underinsured. On top of that, two thirds of businesses that insure their assets do not insure against business interruption, and would not survive a major setback.
According to Julian Lough, National Manager - Commercial Sales at TOWER Insurance, attitudes towards business insurance are changing but not quickly enough.
‘Even though things are changing in New Zealand and more business owners are realising the importance of having their company properly protected, there are many that are seriously underinsured,’ says Julian. ‘This is often down to a reluctance to pay premiums and valuation costs or they might be receiving insufficient advice from their insurance advisers. There is also a certain amount of apathy amongst some individuals. It’s the whole ‘it will never happen to me’ mentality.’
‘Underinsurance is definitely a false economy,’ adds Julian. ‘If insurance cover is less than the value of a business’s assets, and that organisation is hit with an unexpected event, they will find it very difficult to recover.
Julian advises business owners to make sure they are adequately insured by correctly assessing company assets and keeping the insurance company updated with any changes. They should also bear in mind that the cost of a business grinding to a halt can far exceed the cost of replacing the furniture and computers.
‘It is important to remember that it is not just physical items that business owners need to think about protecting,’ explains Julian. ‘A company suffering a substantial setback, such as a fire, flood or earthquake, can take many months to get going again. Profits will be affected and the employer might find it difficult to continue paying for staff and supplies. They may even need to rent alternative premises if the usual ones have been damaged in some way. Taking out the right business insurance policy will mean that these things are taken care of, should the unthinkable happen, allowing the company to continue functioning and supporting the people involved in it.’
For more information, visit www.tower.co.nz.