What is underinsurance?
Underinsurance occurs when the sums you are insured for are no longer sufficient to cover your printing business in the event of an incident.
There could be several reasons for this, the most common being:
- Purchase of extra equipment or tools
- On-site contents and stock
- Premises security measures in place
If your insurance is insufficient, then any claim will not be paid in full. For example, if the cost to rebuild or replace your business premises and/or printing equipment is £500,000 but you are insured for only £250,000, then you would effectively be underinsured by £250,000 or 50%, so you could only receive a 50% payment of the percentage you are underinsured by (a £125,000 payment for a £500,000 loss).
If you are grossly underinsured, insurers may even refuse to pay the claim at all. That would mean a huge loss to your business, which in the event of a premises rebuild could set you back by not only losing income but also missing out on future business.
How do you know if you are underinsured?
If you answer ‘yes' to any of the below, you should consider having your print policy reviewed:
- You have not reviewed your sums insured for a couple of years
- You have made alterations/additions to your print facility
- You have purchased additional printing equipment and/or machinery
- Your buildings insurance is based on market value instead of rebuild cost
- You only have a 12-month indemnity period (that's 12 months from the date of the incident) on your Business Interruption cover, or no cover at all
The recently relaunched BPIF Insurance Services are here to provide you with advice and guidance on your insurance and to assist you with understanding where you may be uninsured.
Our print-specific policy covers the risks of the print industry, including claims such as Printers Errors & Omissions, Breach of Copyright and Bookbinding.
If you think you may be underinsured, call BPIF Insurance Services today on 03301 247 137 or request a call back and our team will be in touch.
Is underinsurance really a problem?
In short, yes.
According to the British Insurance Brokers Association (BIBA), 40% of firms do not have enough cover to get them back on their feet, should disaster strike.
Case study - what are the main underinsurance issues facing printers?
A printing business has taken out buildings and equipment cover, and a 12-month indemnity period on Business Interruption cover.
The printing business uses a litho printer, which suffers accidental damage from tools, requiring the business to arrange several rounds of engineers to fix the problem. However, after trying, it is agreed the machine will need replacing.
As the litho printer is manufactured abroad, the printer must wait months for the replacement, the lead time of which includes build, shipment and set-up/ installation.
During this time, the printer is unable to fulfil orders, and customers are instead moving to a competitor, often at a discounted rate.
Even if the printer was able to replace the machine within the 12-month indemnity period, they will not have gained their client base back and returned to their expected Gross Profit.
With sufficient Business Interruption cover, the printer could have been covered for the resulting financial losses due to the lack of trading.
If you think you may be underinsured, call us today on 03301 247 137 or request a call back and our team will be in touch. As well as Commercial Combined cover, we also can help with your:
- Directors' and Officers' cover
- Cyber Risk insurance
- Trade Credit Insurance
- Mobile cover for vans/transportation
- Employee benefits
Don't worry if your renewal is not due soon, please do get in touch with us and we will be happy to contact you closer to the time.
BPIF Insurance Services is a trading name of Aston Lark Limited. Authorised and regulated by the Financial Conduct Authority. Registered office: Ibex House, 42-47 Minories, London, EC3N 1DY. Registered in England and Wales, No. 02831010.
05 November 2020Back to list
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