The last four years have been tough for the hospitality industry. Inflation and cost of living pressures will likely continue putting the squeeze on the still-recovering sector well into 2024. Staying ahead of industry trends may be more important than ever, but there’s one you might want to pay extra attention to: underinsurance.
What is underinsurance?
Picture this: A fire rips through your restaurant, damaging the building and much of your equipment. You have insurance for both, but thanks to inflation, construction materials and services are much dearer than they were last year. Even the cost of replacing your equipment has gone way up. You suddenly find yourself thousands of dollars out of pocket after your insurer cuts you a cheque*.
Underinsurance happens when you do not have adequate insurance limits to cover losses when you face an insurance claim. Needing to cover these gaps from your accounts could prove devastating. In a worst-case scenario, you may be forced to close your business.
Keeping your business protected
Reviewing your business insurance can go a long way towards addressing underinsurance.
Have your business circumstances changed since you opened? A policy purchased when you first started may no longer fit your business needs. Operating out of larger premises, hiring more employees, investing in new equipment, and having a higher annual revenue are just a few reasons why you may need to adjust your cover limits.
Another underinsurance culprit is lapsed policies. Accidentally forgetting to renew a Public Liability† policy or other cover happens. Making sure essential insurance cover is still current is an easy way to close potential underinsurance gaps.
Finally, you might consider adding new types of cover to your insurance portfolio to address new and growing risks to your business. For example, you might be covered for fire or storm damage, but do you also have Business Interruption† cover? Some expenses, like employee wages and rent, don’t stop just because you’re unable to trade as normal. Business Interruption can help you cover these costs until you’re up and running.
Get covered in minutes
Running a hospitality business can be dramatic, but ensuring your business is well-protected doesn’t have to be.
Visit bizcover.com.au to compare competitive business quotes and get covered instantly. No paperwork, no dramas!
*The provision of the claims examples are for illustrative purposes only and should not be seen as an indication as to how any potential claim will be assessed or accepted. Coverage for claims on the policy will be determined by the insurer, not BizCover.
†This information is general only and does not take into account your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording.
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