Sydney-based insurtech BizCover has urged small business owners to revisit their policies amid coverage gap concerns due to inflationary pressures and increased building costs.

BizCover Head of Product, Channels, and Risk Jane Mason says business owners could face significant shortfalls following loss events due to differences between the total repair cost and how much the business is insured for.

“What was the right cover one year ago may not be enough cover now because of the rising cost of materials,” Ms Mason said.

She says despite peak inflation likely passing, its remnants have continued to cause building products to continue to rise, with steel and timber prices rising by 42% and 21%, respectively, last year. Overall building construction costs are estimated to have increased by nearly 12% since December 2021. 

“The effect inflation has on replacement costs cannot be overstated. Aussie businesses could be left with a serious financial crisis by not having enough coverage to cover your loss,” Ms Mason said.

Business owners are advised to review their insurance policies to ensure that they’re fully covered and avoid having to pay out of their own pockets for sums not covered by insurers.

“It’s critical for small business owners to know how much they’re covered for because events like these can be very expensive,” Ms Mason said.

“Even if your building is totally destroyed and needs to be rebuilt, if the cost to replace it has gone up due to inflation, there may be a gap between what’s covered and what you’ll need to pay.”