SMEs in Queensland are “falling victim” to online insurance providers, who claim to provide comprehensive cover for a fraction of the price but do not provide sufficient coverage.
Many businesses with standard cover are approaching brokerages such as Beenleigh-based Parmia Insurance when a claim has been made against them which their policy does not cover.
Parmia Insurance director Danny Gumm said that due to events such as the 2011 floods, many businesses are now taking insurance much more seriously, but unfortunately there are companies out there that are taking advantage of that.
“The policies are worded very carefully but if you really look at them, you’ll see that there are many shortfalls that are leaving businesses underinsured and exposed to significant financial damage if they were to be sued,” he said. “This is because there is no ‘one size fits all’ solution for insurance. Every industry is different and has its own unique risks. An insurance policy for a beauty salon should not be the same as one for business consultants.”
Gumm said he had had many businesses approach Parmia in financial hardship after a claim has been made against them that their standard insurance policy has been unable to cover.
“Tailored protection provides businesses with the opportunity to increase profits without the financial risks involved in potential liabilities.”
Natasha Burr, senior account manager at Parmia said the issue is that a policy that may be comprehensive for one person is different for someone else.
“Your cover can only be deemed comprehensive when all of the liabilities have been taken into account and a full risk analysis has been undertaken when selecting one or more policies – a broker is an expert in identifying those exposures and evaluating against the products available in the market.”
Burr said the shortfalls with so-called comprehensive policies are that clients may find they are underinsured.
“The policy shortfall depends on what the customer wants to protect. A person’s exposures and liabilities even if they are of the same occupation, can be somewhat different,” she added.