25 per cent of office insurance can now be bought directly online, but this may mean that some businesses are buying the wrong cover, Defaqto says.

Defaqto, an independent research company, says the convenience of buying insurance online can sometimes be a bad thing because too much onus is put on the price of premium rather than the cover itself.

“The number of office insurance policies now available online makes it easier for a business to obtain cover,” Mike Powell, Defaqto’s Insight Analyst for General Insurance said.

“While this is a good development in many ways, if firms purchase online without fully understanding what policies offer and whether the cover they arrange matches their requirements there is a real danger that they could end up with insufficient insurance. This issue is even more acute given the potentially huge financial implications that could result from a business being under-insured”

In their research, Defaqto found that of the 53 office insurance policies currently on the market, 13 could be purchased directly through the internet.

“If a business chooses to arrange their commercial insurance online without advice, they need to place an even greater emphasis on the features and benefits that policies offer when comparing the options,” Powell continued.

“Although important, the premium should not be the primary consideration – given the potential risks involved in an office environment, trying to reduce business costs by cutting corners on insurance could end being the most expensive mistake a business makes”

Some of Defaqto’s findings include:

Business Contents cover 

– 83 per cent of policies will cover the contents of an office as standard, with 7 per cent of policies including cover on an optional basis

– 81 per cent of policies cover contents against ‘all risks’ as standard (including accidental loss, destruction or damage of contents for example), while the remainder provide cover on a ‘specified perils’ basis to protect businesses against a more limited range of risks

Business interruption cover

– 55 per cent of policies provide cover for the loss of income and expenditure incurred by a firm if business were to be interrupted due to an insured risk (for example, if there was a fire which meant that trading at the premises could not continue) as a standard policy benefit – 42 per cent only offer this cover as an optional feature

– The maximum sum insured available for business interruption cover can vary from a specific monetary limit to a selected sum insured requested by the policyholder. Where a specific monetary limit is provided this can range from £100,000 to £2,000,000

– Where supplier-related issues cause business interruption, the cover offered can be based on a specific monetary limit or a percentage of the overall business interruption sum insured. Where a monetary limit is specified the maximum level of cover provided ranges from £10,000-£500,000

Public liability

– In terms of the standard level of cover offered by policies, 8 per cent cover a business’s legal liability for loss or damage to property or physical injury to the public for £1,000,000, whereas 85 per cent provide cover of £2,000,000; only 6 per cent offer cover of more than £2,000,000

Money cover

– 93 per cent of policies provide cover for the loss or theft of money as a standard feature

– Where policies include this feature, the standard level of cover available for money on the premises or in transit ranges from £500-£7,500; and standard level of cover offered for money held in a safe ranges from £500-£5,000

– In terms of the maximum level of cover provided by policies for money cover, 34 per cent of policies allow businesses to select the amount cover they require; where a specific limit is stated within policies, this ranges from £1,500-£12,000 for money on the premises or in transit and from £500-£12,000 for money kept in a safe