Under-insurance

What under-insurance means

Under-insurance means your insurance policy may not adequately cover all employees or reflect current business activities if it’s not updated to match changes such as an increase in the number of employees or a change in business structure.

This can lead to significant financial and legal consequences. It reduces the protection against claims and can unfairly lower your insurance premium, impacting the fairness of the system.

If you are found to be under-insured

Whether it’s intentional or not, providing inaccurate information or failing to update your insurance policy following significant changes may result in penalties. These can include paying back the difference in premium or potentially paying double the correct amount.

How to update your policy

Check your policy details regularly and communicate any changes in your business structure or employee count to your insurer or broker.

If you believe you are under-insured, talk to your broker or insurer and update your insurance policy to reflect the true state of your business.

Taking action now could help you avoid significant penalties, although you may still be liable for any shortfall in your policy’s value during the months you were under-insured.