Insurance can feel like a maze for small and medium-sized enterprises (SMEs). Evolving risks, along with new and complex government regulations and insurance policies, can be challenging to navigate. One overlooked detail can lead to costly gaps in protection that could only become apparent when making a claim. Asking the right questions to your broker is essential to ensure your business is properly safeguarded. Here are seven critical questions every SME should put to their insurance broker.
1. Are we properly covered for Business Interruption?
Business interruption insurance is designed to protect your income if operations are disrupted by an insured event, such as a fire or flood. However, many businesses underestimate how long recovery takes or overlook indirect costs like temporary relocation or supply chain delays. Ask your broker to clarify what triggers coverage, how long the indemnity period lasts, and whether the sum insured reflects your actual revenue. A shortfall could mean struggling to pay staff or losing customers during the disruption and downtime.
2. What are the common gaps in cover for businesses like ours?
Every industry has its blind spots. For manufacturers, it might be machinery breakdown; for retailers, stock in transit; for professional services, errors and omissions. Brokers should identify these gaps based on your operations and risk profile. For example, does your policy cover goods stored off-site? Are you protected against contingent business interruption if a key supplier fails? Understanding and discussing these gaps with your broker helps you avoid nasty surprises when you need to claim.
3. How does our cyber risk profile affect our premiums?
Cyber threats are no longer just an IT issue they’re a board-level concern. Insurers increasingly assess your cyber hygiene when setting premiums. Factors like multi-factor authentication, employee training, and incident response plans can influence costs. Ask your broker how your current practices impact pricing and what improvements could reduce risk (and premiums) as these low-cost changes could save you lots in the long run. With ransomware attacks and data breaches on the rise, cyber cover is becoming as essential as property insurance.
4. Are we at risk of underinsurance?
Underinsurance occurs when the declared value of assets or revenue is too low, leaving you exposed if disaster strikes. It often happens because valuations aren’t updated, or growth outpaces coverage. The consequences can be severe, claims may be reduced proportionally, or even denied. Request a review of your sums insured and consider professional valuations for property and equipment. Regular updates ensure your cover keeps pace with your business.
5. Do we need Directors & Officers (D&O) cover?
Many SMEs assume D&O insurance is only for large corporations, but that’s a misconception. If your directors make decisions that lead to financial loss, regulatory breaches, or employment disputes, they can be held personally liable. D&O cover protects their personal assets and provides legal defence costs. Ask your broker whether your governance structure and risk exposure warrant this protection, as it’s often more affordable than you think.
6. What emerging risks should we be thinking about?
Risk isn’t static. Climate change is increasing flood and storm frequency, while regulatory changes can introduce new compliance obligations. Supply chain fragility and geopolitical tensions also pose challenges. Your broker should help you anticipate these trends and adapt coverage accordingly. For example, do you need insurance for extreme weather events? Should you consider trade credit insurance to guard against customer insolvency? Staying ahead of emerging risks is key to resilience.
7. How often should we review our coverage?
Insurance isn’t a “set and forget” purchase. Growth, new products, remote working, international expansion or movement of your business can all change your risk profile. At a minimum, review your policies annually, but also after major changes. Ask your broker about mid-term reviews and whether they offer proactive monitoring. A dynamic approach ensures your protection evolves with your business.
Insurance isn’t just about compliance, it’s about continuity and confidence. By asking these seven questions, it can begin discussions that can uncover hidden vulnerabilities, optimise coverage, and help you make informed decisions that safeguard your future.
This article comes courtesy of Howden – an expert insurance group that does insurance differently, offering flexible, high-quality cover, and reassuringly straightforward service, while using insurance as a tool to increase resilience. United by a no-limits mindset, Howden is a powerful and passionate team, rising to any challenge to do right by your business.
