Inflation has put small businesses at risk of insurance coverage gaps, warns SME insurance expert Jane Mason from BizCover. Losses due to significant events may result in insurance claims that don’t cover the total cost of replacement due to the rising cost of materials.
Small business owners can reduce coverage gaps by regularly assessing their risks and ensuring they have sufficient insurance coverage for the current value of their assets. Small businesses may be at risk of insurance coverage gaps due to inflation, says SME insurance expert Jane Mason, who urges business owners to review their policies before it’s too late.
Losses due to storm, fire, and other significant events could result in insurance claim payouts that don’t cover the total cost of replacement due to the difference between what the business has insured and the cost to rebuild.
“What was the right cover one year may not be enough cover now because of the rising cost of materials,” says Mason, Head of Product, Channels, and Risk at SME insurance service BizCover.
Overall, the price of building construction rose close to 12% over the year to December. This means that if you insured your building in December 2021, the cost to replace that building may have increased by 12% in one year. “The affect inflation has on replacement costs cannot be overstated. Aussie businesses could be left with a serious financial crisis by not having enough coverage to cover your loss.”