Don’t Get Caught Underinsured — Protect Your Business

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The insurance marketplace is a vast and complex world to navigate for individuals and businesses, especially small businesses that are busy growing and thriving. It is essential and yet challenging to have a thorough understanding of the potential risks that small businesses may face in the event of accidents or unforeseen changes and challenges. Unfortunately, many businesses are underinsured – choosing policies that fall short of coverage when the time comes to claim, or choosing not to insure at all.

Underinsurance is a chronic problem for Australian small and medium-sized businesses (SME). An authoritative report from The Insurance Council of Australia showed a non-insurance rate of 12.8 percent among in the SME sector. A larger 24 percent of sole traders are also opting out. These are likely underinsured businesses who are choosing to save money and hoping that it won’t happen to me.

For businesses that are covered, the majority are likely to be covering only 61 per cent of basic needs.

For the most part, the two prevailing reasons for this trend are the cost of insurance, and the time-consuming process of selecting and organising adequate policies.
The consequences of being underinsured can make the difference between staying in business and insolvency. This impacts business owners, of course. It also impacts the economy. SMEs make up the majority of Australian businesses and contribute $330billion to Australia’s annual fiscal output.

Why Insure?

While insurance premiums add consistent and significant amounts to a business’ costs, there are many more risks to the smooth running of business than may be understood. Natural disasters seem unlikely until a business has faced the reality. Flooding, hail storms, fires are all common events that can wipe out a business if there is no back up from insurance that will either keep the business running or cover the costs of rebuilding.

Essential Considerations to Keep the Business Thriving:

  • Take the time to thoroughly assess your business risks
  • Minimise risk where possible (this could be improving security, updating equipment, improving fire equipment, maintenance programmes)
  • Arrange for more than basic cover
  • Ensure property damage cover reflects the true cost to replace (Buildings, Contents)
  • Consider Business Interruption cover
  • Read the fine print and ask questions
  • Consider evolving risks and Insurance solutions
  • Management Liability to protect directors
  • Cyber Liability, which is overlooked in Australia — recent surveys show that 19 percent of Australian small businesses have experienced a cyber attack
  • Seek the advice of Westlawn Financial Advisers who can guide through all steps of the process

To speak with a Westlawn Insurance Broker phone 1300 WESTLAWN (1300 937 852) or email us at

30 April 2018


CGU – Avoiding Underinsurance

QBE – A Guide to Business Interruption Insurance

Steadfast – The Underinsurance Conundrum Facing Australia

Australian and New Zealand Institute of Insurance and Finance – Solving the SME Underinsurance Problem

Insurance Council of Australia – Non-insurance in the Small to Medium Sized Enterprise Sector

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