Business insurance
When was the last time you checked your business insurance ?
Close to three in four UK SMEs carry some underinsurance. Where a sum insured has fallen behind what it would cost to rebuild or replace, the insurer can cut a claim by the same proportion. Cover is worth going through at every renewal, and every two years at the very least.
of UK SMEs carry some degree of underinsurance. Hiscox, 2025
Cover gap calculator
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What you would be left to find
£15,000
On a claim of £45,000
This shows how an average clause works. Whether one applies to you, and how it is worded, depends on your own policy. A claim is also capped at the sum insured.
Get your cover checked for free
A free check carried out by a broker regulated by the Financial Conduct Authority. They go through your sums insured and what your insurer has been told, against the business you run now. There is no obligation to change anything.
Two ways a payout gets cut
The first is underinsurance. Many commercial property and contents policies carry an average clause, which applies where the sum insured is below the value at risk. It scales the settlement down to the proportion you had insured, on partial losses as well as total ones.
The second is what you told the insurer. The Insurance Act 2015 sets a duty of fair presentation. Where something material was not disclosed and the insurer would have charged a higher premium, it can pay a proportion of the claim instead of the whole of it. On a premium of 2,000 pounds against the 2,500 pounds the insurer would have charged, that proportion is 80%, and a 50,000 pound claim is settled at 40,000 pounds.
Aviva reports that 68% of brokers have seen a rise in claims being declined or settled for less than the amount claimed. Our guide to reviewing your business insurance every year sets out what to look at before renewal.
A 45,000 pound claim on a property insured for two thirds of its value
What you claim
What the insurer pays
What you find yourself
Worked example using an average clause. A building insured for 120,000 pounds against a rebuild cost of 180,000 pounds is insured for 67% of its value, so a 45,000 pound claim is settled at 30,000 pounds. The rest comes out of your own money, which is one of the reasons a small business keeps a cash reserve.
What the research says
Figures from the Association of British Insurers, the Aviva Broker Barometer and Premium Credit.
What the check covers
The business you insured at the last renewal is not always the business you are running now. Our guide sets out what to go through before a renewal.
Sums insured
Buildings, stock, contents and plant against what they would cost to rebuild or replace at today's prices.
What the insurer was told
New work, new premises, new equipment and anything else that counts as a material circumstance under the 2015 Act.
Cover you do not hold
Employers liability, business interruption and cyber are the three most often missing or set too low.
Legal duties
Employers liability must be at least 5 million pounds with an authorised insurer. GOV.UK sets a fine of 2,500 pounds for every day you are not insured.
What happens next
From your own figures to knowing where you stand.
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Run your own figures
Use the calculator above to see what a shortfall would take off a claim of the size you might make.
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Fill in the short form
A few details about the business and what you insure. It takes a couple of minutes.
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Your cover gets looked at
Someone qualified goes through your schedule against the business you run now and tells you where the gaps are.
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You decide what to do
Take the findings to your current broker, act on them, or leave things as they are.
What would a claim actually pay you?
The check is free and there is nothing to sign.
Frequently asked questions
What does underinsurance do to a claim?
Where a policy carries an average clause and the sum insured is below the true value, the insurer can reduce what it pays by the same proportion. A property insured for two thirds of its rebuild cost can have a claim settled at two thirds, whatever the size of the loss.
What is an average clause?
It is a condition in many commercial property and contents policies that applies where the sum insured is lower than the value at risk. It scales the settlement down to the proportion of the true value you had insured. Whether one applies to you depends on your own policy wording.
How much employers liability cover do I need by law?
GOV.UK states that employers liability insurance must cover at least 5 million pounds and must be held with an authorised insurer. You can be fined 2,500 pounds for every day you are not insured, and 1,000 pounds if you do not display or produce the certificate when asked.
What do I have to tell the insurer?
The Insurance Act 2015 sets a duty of fair presentation. You must disclose every material circumstance you know or ought to know after a reasonable search. If you do not and the insurer would have charged a higher premium, it can settle a claim proportionately rather than in full.
How often should I check my cover?
At every renewal, and every two years at the very least. Check again whenever something changes. Taking on staff, moving premises, buying plant, adding a vehicle, starting to hold customer data or taking on work of a different kind can all change what you need and what you must disclose.
Does the check cost anything?
No. The check is free and there is no obligation to change anything. It is carried out by a broker, not by IQ Money.
Who carries out the check?
A broker regulated by the Financial Conduct Authority. IQ Money publishes this page and does not advise on insurance, arrange cover or carry out the check.