Childcare businesses are at risk of underinsurance! But what is it?

According to statistics by Sedgwick (2021), around 80% of small or medium-sized enterprises (SMEs), which includes most childcare settings, are in danger of being underinsured, but many are unaware of the financial implications.

Underinsurance means that you have less financial cover for your property than you need, which can often only come to light when you make a claim.

“Underinsurance is a little-known insurance issue with massive implications for childcare businesses”, says Pippa Cripps, Team Leader at specialist childcare insurer, Morton Michel. “Taking out the right amount of cover isn’t always as straightforward as most owners want to believe. That’s why it’s crucially important to research the topic when taking out specialist policies”, adds Cripps.

To help childcare business managers navigate the insurance challenges successfully, Morton Michel has created a useful guide.

You might be underinsured without realising!

If you undervalue how much cover you need for a property claim, you’re at risk of underinsurance and would need to make up the remaining costs that the claim would have covered yourself. Although it’s not always as simple to avoid as it may seem. For example, some of the most common causes of underinsurance can be confusing the market value of a property with its rebuild cost and keeping on a previous business owner’s insurance cover without reassessing.

Why is it important to avoid underinsuring your property?

While few childcare businesses actively consider a situation where they could be underinsured, the outcome can be financially devastating. For example, if you bought a business from another owner and inherited their insurance without reassessing insurance cover values, you could end up with an insurance claim deficit in the event of damages that could affect your ability to keep up with overheads, essentially forcing bankruptcy.

Using the Rebuild Cost Assessment Service

While underinsurance can be a serious problem if not considered, it doesn’t have to cause you or your business any extra stress. Morton Michel has partnered with the Rebuild Cost Assessment service to give customers an inclusive desktop property rebuild assessment. This means that when you are deciding on your necessary property insurance claim value, the RCA can help you avoid the unfortunate situation of underinsuring your business.

“Many operators in the childcare sector aren’t taking all the right measures to ensure their claims finances are accurate, as it used to be quite the laborious task. Although now with services like the Rebuild Cost Assessment it’s never been easier!” concludes Cripps.

See Morton Michel’s full in-depth blog on underinsurance and the benefits of the Rebuild Cost Assessment here:

https://www.mortonmichel.com/news/property-underinsurance

Notes to Editors

About Morton Michel

Established in 1964, Morton Michel has been trusted by childcare professionals for over 56 years to provide insurance, risk management and service solutions tailored specifically for the childcare and education sectors.


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About Morton Michel

Established in 1964, Morton Michel has been trusted by childcare professionals for over 56 years to provide insurance, risk management and service solutions tailored specifically for the childcare and education sectors.


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