Underinsuring

similar incident, it’s likely there will be a financial impact in the form of loss of earnings. Essentially, the purpose of Business Interruption insurance is to cover the income a business would have received had the incident not have happened. For many businesses, this cover is a fundamentally important part of its business continuity plan, to safeguard the business and enable it to continue operating after an insured incident.

Business Interruption cover is usually an optional benefit that policyholders can add in conjunction with other policy sections. The onus is on the business owner to assess whether they could realistically continue to trade should their business premises, equipment or assets be damaged or destroyed due to an unplanned event or disaster.

Let’s look at a couple of possible

underinsurance scenarios…

Scenario 1: Ceri and Logan run ABC Pet Groomers, a popular and busy grooming business in Anytown. It is situated on the High Street, in the premises that they acquired when they bought the business from its former owners in 2014.

When Ceri and Logan first took out insurance for their business, they insured the buildings for property damage to the sum of £150,000, based on rebuild valuations obtained at the time. Each year, when renewing their business insurance, they’ve kept the same values. However now, nine years later, current valuations calculate the rebuild value at £250,000. That £100,000 gap in the insured value means that the property is effectively underinsured by 40%. In a claim scenario, the insurer’s obligations are limited, and the policyholders would be responsible for making up any shortfall themselves.

Scenario 2: Jordan runs a grooming school and salon. He arrived at work one morning to find that a pipe had burst and escaped water had flooded the building, causing significant damage to the premises and equipment. Vital repairs were required, and Jordan was told that this could take several months. Without suitable alternative premises to work from, Jordan had to cancel client appointments and faced a significant loss of income. Unfortunately, Jordan did not add Business Interruption cover in his insurance policy when he set it up. It could have provided protection against loss of revenue whilst temporarily unable to trade as a result of this unexpected event.

About Dr Sophie Bell

Dr Sophie Bell is a qualified dog groomer and has also been a vet for over 14 years. Sophie has written and delivered a variety of courses for both pet professionals and pet owners. She launched ‘Animal Love Pet First Aid’ as a go-to site for people to access reliable and user-friendly information on a variety of pet topics.

About Lorraine Nash

Lorraine is a familiar face in the UK pet insurance industry, with several years of experience working with high-profile providers in a variety of operational, partnerships and sales roles. Having joined Petcover Group in 2022, Lorraine’s focus includes engagement with pet professionals and commercial customers to understand the sector’s changing requirements.

About Petcover Group

Petcover Group is a global pet-focused insurance provider with a range of brands in its portfolio, including British Pet Insurance Services and Brooks Braithwaite (Sussex) Limited in the UK. The business offers a range of quality, affordable insurance options for an array of pets, pet businesses and pet professionals.

For a quote and to find out more about British Pet Insurance Services, visit: britishpetinsurance.co.uk

01444 708 840

Terms, conditions and excesses apply. British Pet Insurance Services is a trading name of Petcover EU Limited which is registered in England and Wales under number 10001319. Petcover EU Limited is authorised and regulated by the Financial Conduct Authority under reference number 747757.

Key Takeaways

• If in any doubt about whether you have adequate insurance cover in place for your business, contact your insurance provider promptly to discuss the matter

• It’s wise to review your insurance needs and your policy options each year, prior to renewal

• Underinsuring may result in being considerably out of pocket, particularly in a significant or total loss scenario, which could have a devastating impact on your business