Insurance Insights & Advice

“I Thought I Was Covered” – One of the Biggest Risks for UK Businesses

Admin, Ratcliffes
4 January, 2026

Most business owners don’t set out to take unnecessary risks.

As we move into 2026, many UK businesses are operating in a challenging environment. Rising costs, tighter margins, more demanding contracts and inflation-driven increases in rebuild and replacement values have all changed the risk landscape over the past few years.

Against that backdrop, underinsurance remains a persistent issue. Recent industry research, including Hiscox’s Global Protection Gap Report published in late 2025, found that 74% of small and medium-sized businesses worldwide are underinsured. The research was based on responses from over 6,000 business owners across the UK, Europe and the US.

The picture is particularly relevant in the UK. Multiple industry reports suggest that up to 80% of UK SMEs may be underinsured (consumerintelligence.com), often driven by rising premiums, limited resources, and a lack of understanding around complex policy terms. As a result, many businesses hold cover that no longer reflects current values, activities or contractual responsibilities. In practice, this means many businesses have policies in place that may not pay out in full, or may only cover part of the loss, when a claim arises.

For many businesses, the biggest risk isn’t what they haven’t insured at all, it’s what they think is already covered.

What underinsurance really means (in plain English)

Underinsurance doesn’t usually mean having no insurance in place.

It typically means:

limits that no longer reflect today’s business values
cover that hasn’t kept pace with change
gaps or assumptions between policies

The issue often only becomes clear after a loss, when it’s too late to fix.

Common gaps businesses don’t realise they have

While every business is different, certain patterns appear again and again.

Vehicles and operations often change faster than policies, leaving gaps around tools, goods, drivers or vehicle use.

Goods in transit and storage are frequently assumed to be covered automatically, when limits or conditions may not reflect current turnover or contracts.

Public and employers’ liability limits may no longer meet client requirements, or responsibilities around subcontractors may be unclear.

Where media and creative businesses are often caught out

Media and creative businesses face similar issues, often compounded by valuable equipment, mobile working and short-term projects.

Common gaps include:

equipment insured for original cost, not replacement
cover restricted to premises rather than locations or transit
liability limits that don’t meet venue or client requirements
uncertainty around freelancers, contractors and crews
professional or cyber risks not reviewed as services evolve

Why underinsurance keeps happening

In many cases, insurance is arranged at a particular point in time , for example when a business starts, takes on its first vehicle, or wins a key contract , and then renewed year after year with minimal change.

Meanwhile, the business itself continues to evolve. Turnover grows, contracts become more demanding, equipment values increase, and ways of working change. Unless cover is actively reviewed, small mismatches can gradually turn into meaningful gaps.

On top of that, insurance wording can be complex, making it difficult for busy business owners to spot when cover no longer reflects reality. Combined with cost pressures and competing priorities, reviews are often delayed, quietly increasing exposure over time.

Why this matters more today

The consequences of underinsurance are becoming more significant.

Claim values have increased due to inflation and higher replacement costs, while many contracts now specify minimum insurance limits that didn’t exist a few years ago. At the same time, businesses are more reliant on vehicles, specialist equipment and digital systems to operate day to day.

As a result, a policy that once felt ‘about right’ may no longer reflect how a business actually operates , or the scale of loss it could realistically face if something goes wrong.

What a meaningful insurance review should do

A proper review isn’t about increasing premiums for the sake of it or adding unnecessary policies.

It’s about checking limits against current values, understanding how the business actually operates, and removing assumptions before they turn into problems.

In practical terms, that usually means:

reviewing sums insured to reflect today’s replacement and rebuild costs
confirming how vehicles, equipment and premises are actually used
checking that goods, tools or kit are covered wherever they’re stored or transported
making sure liability limits still meet client, venue or contract requirements
clarifying responsibilities where subcontractors, freelancers or hired-in equipment are involved

For some businesses, the free Underinsurance Awareness Check by Wisteria Security can be a helpful starting point. This tool is designed to support awareness only and does not provide insurance advice or recommendations. Instead, they help highlight where assumptions may have changed and can make it easier to prepare clearer, more focused questions ahead of a conversation with an insurance professional.

How Ratcliffes can help

At Ratcliffes Insurance Brokers, we work with businesses across commercial vehicle, logistics, media and professional sectors to make sure insurance keeps pace with how they actually operate.

Rather than a tick‑box renewal, our approach focuses on understanding your business in practical terms , how vehicles are used, where goods or equipment move, how contracts are structured, and how risks have changed over time.

That allows us to identify genuine gaps, explain them clearly, and help put appropriate cover in place through our panel of insurers , without unnecessary complexity.