Three Cases of Under-insurance
LMI was appointed on three new business interruption losses in Melbourne this week and in every case the Insured was well under-insured. In one case only 1/3 insured. This in the most hazardous of all businesses!
The hard facts are that without a major cash injection to keep paying the bills, this business will soon fail. At least one other will most likely fail while the other will survive but the business will sustain a significant loss this year instead of reporting a healthy profit.
It was no different in our Brisbane and Sydney offices where they had major claims but only had additional increase in cost of working cover when full business interruption insurance was was required.
The issue of under-insurance, or non-insurance, particularly in business interruption, is a constant problem. The only way a business can protect itself fully from financial ruin is to have adequate business interruption insurance for an indemnity period sufficient to reinstate the property assets of the business and to fully recover from any disruption. To learn more, I refer readers to the BI explained area of www.BIcalculator.com.