The Rising Risk of Business Underinsurance

Why is underinsurance such a problem?

Insurance policies are designed to protect your assets, cash flow, and ability to trade after an unexpected event such as a fire, storm, or equipment breakdown. But if the sums insured on your policy don’t reflect the true replacement value of your property or assets, you may only receive a portion of what you need to rebuild, repair, or replace them.

With building costs and inflation climbing in recent years, it’s become more common for businesses to find themselves underinsured. Unless your sums insured are regularly reviewed, your policy could be leaving you exposed.

How does underinsurance affect claims?

Most policies include an “average” or “co-insurance” clause. This means that if your declared sums insured are lower than the true value, the insurer will only pay a proportion of the claim—even for partial losses.

For example:

• You insure a property for $5 million, but the replacement value is actually $10 million.
• A fire causes $1 million worth of damage.
• Because the property was only insured for 50% of its value, the insurer may only cover 50% of the loss – leaving you $500,000 out of pocket.

How Bentleys can help

Bentleys is committed to helping our clients safeguard their businesses. One of the most effective steps you can take is obtaining an independent professional valuation of your property and assets. This ensures your sums insured are based on current market conditions and accurate figures.

To make this easier, Bentleys clients have access to iValuate at no cost. iValuate is a specialist valuation service that provides desktop and onsite assessments, tailored to your circumstances. By incorporating these valuations into your insurance reviews, you can reduce the risk of being underinsured and strengthen your financial resilience.

What should business owners do now?

• Review your current sums insured – when was the last time they were updated?
• Use iValuate – as a Bentleys client, this service is available to you free of charge.
• Speak with us – we can work with you and your insurer to make sure your cover reflects your actual exposure.

Insurance is a safety net, but it only works if the numbers are right. At Bentleys, we’re here to ensure our clients are protected and not left out of pocket when it matters most.

If you’d like to check whether your business may be underinsured – or to arrange your free iValuate report as part of your relationship with Bentleys – please contact Helen Smith, Senior Account Manager on 0459 575 788 or speak to your Bentleys advisor today.

Want to know more about how Bentleys can help you?

Contact Bentleys today for a consultation with one of our expert tax advisors who can offer tailored advice specific to your industry, business structure, and growth ambitions. With the right strategic tax partner, you can turn tax management from a necessary obligation into a competitive advantage. We’re here to help you get where you want to be.

Disclaimer: This information is general in nature and should not be relied on as advice. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs and seek professional advice before making any decisions based on this information.