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Guest blog: Is your business insurance a liability?

Ben Rose, Chief Underwriting Officer, Digital Risks

Here’s the low-down: around half of SMEs in the UK are underinsured. The repercussions being that a claim could result in a hefty unexpected expense or worse, bankruptcy.

It’s not surprising - the process of getting insurance generally isn’t plain sailing. If nothing’s gone wrong, you’re unlikely to re-evaluate your cover. And you’re not alone - over 80% of SMEs renew rather than re-evaluate their insurance, each year.

What’s the risk to your business?

While sticking to bog-standard cover with your long term provider may seem convenient, it could end up costing you dearly.

Being underinsured
Being underinsured is incredibly common. You may be thinking, “I’ve not had to make a claim, I’ve saved a bit of money”. But is it really worth the risk? If you did end up needing to make a claim beyond your cover limits, could you afford it?

Being overinsured
Less of an issue - in the sense that you’re adequately protected - but it all adds up and perhaps that money could be better spent elsewhere?  

Emerging risks

While most SMEs will consider public liability and employers’ liability (a legal requirement if you have employees), other important covers are often neglected, such as cyber insurance or media liability cover.

Cybercrime, in particular, is a monstrous, ever-evolving threat to businesses - and many aren’t protected. In 2019 43% of data breach victims were small businesses - yet only 11% of UK companies have cyber cover.

And being vigilant about cyber security within your own company often isn’t enough - if you share data with a supplier, you’ll need to consider their data security too. A GDPR fine could cost your business up to €20m, or 4% of annual turnover – whichever is higher - so having cyber insurance can really pay off.

What’s stopping you reviewing your business insurance?  

It’s not as if we’re married to service providers. With record numbers of people switching energy suppliers year-on-year, getting better deals, we’ve embraced service provider switches. And like picking an energy provider, insurance isn’t something most of us get excited about (although having the option to support greener energy is pretty neat).

Insurance providers aren’t flexible enough

It’s clear to see why so few people regularly review their business cover as they would their energy supplier: insurance providers are generally inflexible and penalise change.

Unlike the ease of switching energy providers, the process of updating your cover, whether changing providers or making alterations to a policy, involves filling out forms and making phone calls.

Unlike many energy companies, which now waive exit fees, insurance providers pile on arbitrary admin fees - sometimes even to make the minutiae of changes - and usually only offer annual contracts, with cancellation fees.

How Digital Risks is different

At Digital Risks, we embrace flexibility. We understand that your business needs to be agile, adapting to fast-moving internal and external pressures. We recognise that the cover you need may change from one month to another. You can take advantage of the Digital Risks perk through the Perks section of our Revolut Business web app following the simple instructions to get started.