Business on a budget: protect yourself from rising insurance costs

Andy Yates, entrepreneur and director of Huddlebuy.co.uk, the daily deals site for entrepreneurs gives Real Business readers regular top money saving tips to help business owners save thousands of pounds.

This week: Don’t risk paying over the odds for insurance

Let’s be honest, your average article about insurance can be deadly dull. It is, after all, one of those boring business necessities.

So how to make it interesting? Pack if full of top tips on how to cut those blinking insurance bills. Yes if you own a business you are probably a risk taker – but you don’t need to risk paying over the odds for insurance.

Tip 1: Compare and contrast

One of the best ways to get a good view of the market is to use some of the popular comparison services.

Make it Cheaper, Simply Business, GoCompare, Money Supermarket, Your Insurance and Business Insure, Towergate.co.uk and Pinsure.co.uk are good starting points to give you an idea of the best current deals in the market place.

Bargain hunting can bring some big savings. For example Huddlebuy has negotiated a 35 per cent cash back for insurance deals with Simply Business.

Remember there are much fewer business insurance providers than home and car insurance providers, so you may only receive a handful of quotes – but shopping around can still produce some big savings. And if you haven’t heard of certain brands, it is wise to read the details of the insurance policy wording and look at the insurers that back each of the brands listed for your own peace of mind.

Tip 2: Read the small print – in a big way

As with any policy you take out, you need to make it a policy to read the small print.

Check how long you are locked in for and make sure you know your switching date (ie the date you can switch insurance provider’s by, which may be different from your renewal date especially if you are dealing with cunning suppliers).

Then make sure you find out the best prices available before your policy rolls over and it is too late to change. If you find a better deal it can often pay to negotiate with your current provider and ask for a discount if you find a much better deal.

Tip 3: Consolidation

Yes, there are lots of different types of insurance – some you must have (eg employers liability insurance if you employ people), some you should have (eg professional indemnity – to cover the risk of being sued by clients if something unfortunate happens) and some that may be applicable to your business (eg public liability insurance). Then, of course, there is office and contents insurance and a whole host of other ways you can protect your business or key employees.

One money saving tip is to see if you can use the same provider for all your insurance. Consolidating coverage can help you save money – especially if there are discounts for multiple policies. It can also cut down on the admin!

Tip 4: Risk averse

Reducing your risk, including your business property’s risk, can help reduce your premium. For example good security and alarms on your property can cut the bills. 

Taking a higher voluntary excess (as long as you can afford it if something goes wrong) can also help. Your risk assessment may also increase with each claim, so consider absorbing small losses and using the insurance for larger claims.

Tip 5: Experience can help

If you have been trading for a long period of time and have demonstrated that you run a successful business, an insurer may offer you discounted rates – so it is worth shopping around if your current supplier doesn’t help.

Of course the reverse is true of recent start-ups – where initial rates may be higher than average. Having a partner, senior executive or manager with related experience can reduce your rates.

Tip 6: Brokering a good deal

Comparison sites and services can be a good starting point, but negotiating directly with an insurance broker and asking for the most cost-effective options to suit your exact needs can give you the full picture.

Remember not all insurance brokers, such as Insurantz or Blackfriars Group, appear on comparison websites.

Tip 7: A special deal

Using a specialist insurer for your industry can yield some savings. They will be used to the specific requirements and options available to you and may be cheaper than general insurers who do not fully understand or appreciate the risks and requirements of more specialist sectors.

Tip 8: Cut (but not too deeply)

The most obvious way to get a cheaper price on many types of insurance is to reduce the amount of cover you buy. Indeed this is a trick often used by brokers to reduce the quotes you get.

This can bring savings – but just make sure you read the policy and get the cover that is right for you. Don’t scrimp too much and don’t be afraid to ask if you don’t understand anything so you know exactly what bang you are getting for your buck.

Next time: Top money saving tips on how to create a successful website.

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