Some useful advice from Morton Michel, as many informal childcare arrangements lack any insurance cover and those in business might not have enough cover now that inflation has increased the costs of fighting legal cases, damage to property etc. Then there’s the risk profile for companies who offer childcare facilities on-site. As we move towards a hybrid office model becoming the norm many parents will be asking companies to provide childcare on site for the 2-3 days per week they attend an office.
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 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.
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.
See Morton Michel’s full in-depth blog on underinsurance and the benefits of the Rebuild Cost Assessment here: