Small Businesses Face Underinsurance Risk
Every year in Australia, when natural disasters hit, inevitably the focus turns to insurance and specifically the number of people who are underinsured. Unfortunately, underinsurance in business is also common, particularly for small businesses such as jumping castle operators and play centres, and those in the security industry.
How bad is the underinsurance problem for Australian businesses?
• Research by Swiss Re Economic Research & Consulting shows that Australia is one of the most underinsured nations in the developed world.
• Studies of Australian small businesses – such as jumping castle operations, play centres and those in the security industry – have shown that more than 60% don’t have insurance for business interruption, 80% don’t have machinery breakdown cover, over 30% are uninsured for burglary and 16% don’t have insurance that covers them for fire.
• A study conducted by the Australian Securities and Investments Commission found that 1 in 6 small to medium business enterprises did not have insurance for their properties. Further research showed that of those businesses that did have insurance for their properties, most were significantly underinsured.
• Approximately 70% of small businesses don’t recover after a major loss or incident.
The importance of insurance can’t be overemphasised when disaster – small or major – hits. Having adequate insurance means your business can bounce back from a setback quickly as you’ll have the finances to fund your recovery. Without adequate insurance, your jumping castle, play centre or security firm may be out of business for a long time, and perhaps join the 70% that go out of business permanently.
Why are many Australian businesses underinsured? There are two key reasons that are regularly cited. The first is a lack of knowledge, with many businesses owners simply not sure whether they were adequately insured or not. The second was cost, with some businesses claiming they couldn’t afford the insurance premiums.
Insurance brokers, such as Safe Hands Insurance Group, can help. They have the experience and knowledge to ensure your business is covered for all types of eventualities, including jumping castle insurance.