Check insurance impact of weakening pound by Zach Gray
As the pound weakens, currently standing at €1.11 and $1.24 (at the time of writing), and fears increase following hardline announcements regarding our access to the single market from politicians both home and abroad, it is important for businesses to understand the impact the weak pound can have on their insurance arrangements.
Many businesses here in the UK import their machinery from the EU and beyond; as such they are buying equipment and stock in euros, dollars and yen.
The weakening pound can impact upon the level of cover in place on your policy which will typically be arranged in pounds sterling.
Consider, for example, machinery bought for €1,000,000, which would previously have insured at circa £800,000, will now need to be insured at a figure of £900,000 to provide the same benefit under the policy and ensure the payment is adequate to replace the same machine.
There are also businesses operating abroad who are required contractually to insure their liabilities to a limit set out in a different currency which may again now require an uplifted limit in sterling.
It is important that businesses (and individuals) to keep a close eye on their sums insured to make sure their cover is adequate to cater for these fluctuations.
Zach Gray is commercial director at D E Ford Insurance Brokers. Providing bespoke insurance packages for businesses and charitable organisations.