It’s easy to forget the UK still has to negotiate a departure from the EU!. One aspect of concern for UK businesses should be underinsurance.
With Lockdown 2 and the US Presidential Election dominating the news it’s easy to forget that the UK still has to try and navigate a safe passage through the choppy waters of a departure from the EU! Here at Expat Mortgage we have long held the opinion that going into this difficult period, one particular aspect that should be of concern for UK businesses is underinsurance.
The possibility that your business could be underinsured is easily overlooked all of the time that you don't have to make a claim. On the day you have to call your insurers however you may well be shocked to discover the figure is reduced.
The key factor here is whether or not you have the full insurance in place to cover your firm's physical assets or, in the case of lockdown, the negative impact of business interruption? You may not think that you will be directly impacted by new lockdown regulations but with continual changes taking place can you be sure this will remain the case?
Meanwhile the link between Brexit and underinsurance may be less obvious but again there is a significant danger to any business importing physical assets from overseas that are priced in a foreign currency? If the sum insured for that asset is priced in sterling, for instance, then an adverse fluctuation in the exchange rate will undoubtedly mean that the sum insured is obsolete.
The sum insured may well need to increase if an asset increases in value due to currency fluctuations.
Expat Mortgage head of sales Alex Ewen explains:
“Many UK manufacturers import parts from abroad, as do wholesalers and suppliers of goods and services. It is therefore likely that some of their costs have risen, which they may choose to pass on making some UK goods and services more expensive. It is therefore important to comprehensively review 'new for old' replacement costs.”
Ewen, who oversees sales at Expat Mortgage, a UK regulated mortgage brokerage renowned for expert advice and personal service levels, adds that business owners should keep an eye on their sums insured and the limits of liability to ensure that their cover remains adequate, even in the face of the significant currency changes that are so often the hallmark of turbulent times.
For a protracted period now, continued uncertainty over whether the UK and EU can reach a new trade deal has forced many businesses to stockpile goods. Naturally they are wary of the potential impact a no deal Brexit would have on their supply chains.
Ewen continues: “As the end of the year Brexit draws closer, the government is encouraging businesses to plan for every eventuality. Businesses are starting to run supply chain tests and fill their warehouses with essential goods and inventory to ensure they can manage in the worst-case scenario of high tariffs and hard borders.
Stockpiling can cause big concerns about the levels of insurance cover businesses have in the event of a claim. When stockpiling it is crucial that business owners talk to their insurance broker to re-evaluate their insurance risk and, where necessary, increase the sums insured. If they don’t the insurance in place may not be sufficient to cover the additional stock in the event of a claim potentially leading to a significant financial loss.”