27-06-2007
Buying the cheapest policy is not always the best option
Members of the FSB (Federation of Small Businesses) are reporting that the cost of commercial insurance cover is rising by an average of 200% while some small firms have premiums that have risen over 500%.
The costs may seem prohibitive but purchasing business insurance is one of the most important tasks you will undertake for your business and shouldn’t be taken lightly, as a comprehensive policy will protect you when the unexpected happens.
Two great reasons to take out business insurance
Some insurance is compulsory in the UK, such as Employment Liability Insurance. You must have it if you employ staff, even if only on a part-time or casual basis. You could also be fined up to £2,500 per day for every day that you do not have the right cover.
Many types of business need insurance certificates in order to secure clients. Usually proof of Professional Indemnity or Public Liability cover is needed. Your customers need to know that they will be compensated appropriately should something happen to them because of you or your business, and insurance certificates will offer them peace of mind. They also offer reassurance that your business is legitimate – particularly important for tradesmen.
Reducing your insurance premiums
In many small businesses it is the company director or secretary who undertakes a multitude of core tasks, including the purchasing of insurance. Time constraints and sometimes a lack of insurance knowledge can therefore result in many SMEs simply taking the cheapest policy on offer. However businesses should spend time on research as the cheapest policies do not always offer the best or most comprehensive cover.
Whilst insurance payments can sometimes be a burden to a small business, there are ways of reducing the bill.
Small businesses can lower their insurance costs by weighing the value of some of their business activities against the costs of insuring them, says the Federation of Small Business. For example a fitness trainer who teaches non-contact classes might think of including cover for sports massage as he does a bit now and then. But including this extra insurance on the policy could double the price – he would have to decide whether his massage service brings enough money to the business to off-set the extra cost.
Getting the right insurance
In order to ensure you get the right insurance for your business, get some quotes and then talk through your needs with an expert. The Simply Business website offers a range of impartial quotes, which can either be bought instantly or discussed with a consultant. On their website you can see the quoted policies before purchase and you have the opportunity to tailor them to your needs and budget while online.
Make sure that you purchase insurance that is tailored to your specific business type. Every policy should be as individual as the company concerned, which means that you may have several types of cover included in your insurance. But don’t end up paying for unnecessary cover.
There are bolt-on covers that can usually be added to your policy and these can be cheaper if you purchase them in a single package with your main insurance. Look out for covers such as Legal Protection, Personal Accident Cover, Business Travel and Key Person Insurance. If you decide you need any extras it is better to buy them early on rather than adding them later.
Some insurers have extras that are already included in the policy so you need to check this before purchase. Ask for those that are not required to be removed in order to lower your premium costs.
Another way of lowering premiums is to take up best practice in health and safety measures. A good health and safety audit can help to lower insurance costs.
Flexible insurance for flexible businesses
Unfortunately too many businesses have had to learn from their mistakes. Upon making a claim they’ve found that their losses aren’t covered, often due to just one small line tucked away in the small print. If your business changes in any way after you’ve taken out a policy you should always check to ensure that your insurance is still valid. This includes updating your contact details whenever they change. A flexible policy, like those you will buy from Simply Business, ensures that when changes happen you’ve only to inform them and your business remains protected.
It is simply not worth taking chances by taking up the first insurance quote that you are offered because it is the cheapest. Take a reference number in order to investigate your quote further in your own time, and ask for a copy of the policy details before you buy. With Simply Business you can set up an account online where you can view all your quotes and policies at any time.
When looking over your quotes, check the policies for any clauses stipulating certain requirements such as a specific type of lock on the windows, for example. There may also be certain exclusions on the cheaper quotes which should be noted although they may not be relevant to your business.
Above all remember to be honest. There is little point in exercising diligence when taking out a policy only for a claim to be rejected due to “a little bending of the truth” when you first applied in order to get a cheaper deal.