Insurance is a necessary requirement for a business of any size, but it is the small business owner and entrepreneur who will be keenest of all to ensure the best coverage for the lowest cost. Whether you are an IT consultant, marketing company or retailer, we look at what you need to think about when it comes to your business insurance.
Choosing sufficient coverage
Making sure that your business is well covered can actually do a great deal in lowering premiums. Comprehensive coverage indicates that a business is not willing to take risks where they do not need to. While a number of policies for businesses are legally necessary, there are a number of other policies which can be real lifelines for small businesses.
Key man insurance, for example, covers a business against the loss of a vital employee – be it through illness, injury or death. For small businesses in particular, this can be an invaluable investment. Surprisingly, only around 6% of businesses have key man insurance at the moment. A far greater proportion of businesses are insuring their office equipment over their most important assets – their staff!
Risk assessment
Insurers themselves will perform a risk assessment when quoting for insurance. The cost of the coverage will be determined by the likelihood of a claim becoming necessary and the potential size of any claim which does. The best place for any business to start going about the reduction of insurance premiums is to perform a basic risk assessment. It should be relatively obvious where your business is most vulnerable, but talking it through with professionals will help make clear any dangers that you might have missed.
Take action
As well as considering specific weak spots, it is important to train staff regularly. Making staff aware of dangers, as well as of existing guidelines, can secure your business against claims. Getting caught working outside of guidelines is too simple an error to make. However, if a business does not take responsibility for informing its staff of such guidelines, then it runs the risk of being liable for such simple errors.
The importance of a history
Insurers will look at the current working environment within a business in order to assess the cost of an insurance plan, but they will also look to the past too.
Unfortunately previous insurance claims will reflect badly. The key to building a strong insurance history is making balanced judgements about the necessity of claims. Short term benefit often pushes companies to claim wherever possible, selecting a low level of excess where applicable. In truth, it can be far more cost effective for businesses to take the initiative, particularly when it comes to smaller claims.
It also helps that evidence of exercised restraint looks very positive to insurance providers! In the long term, it is often the wiser choice for a company to pick up their own costs, rather than running to their insurance company every time they are eligible to file a claim, much like you might do following a minor scrape on a car.
Insurance providers like businesses to provide a full and clear history of others with whom they have worked. Professional Indemnity Insurance from Hiscox is designed to cover against professionally filed claims. Businesses should be careful to ensure that contractors have records as clean as their own. Often any companies with whom a business joins up with will have some impact on the level of what they pay out in insurance premiums.
Building a strong relationship with your insurer
Elements of risk can be fully understood only when businesses are clear and transparent about their actions. Any unknown elements will rarely be offered the benefit of the doubt by insurance providers. It is therefore beneficial for businesses to become as close to their insurers as possible and to allow full access to the business.
Many business owners are often surprised when they are quoted higher than expected business insurance premiums. But the simple reason for this is that in most instances their existing cover is not adequate. In order to get the best deal it is always advisable to have an open and honest chat with your insurer. If you are able to understand the reasons for changes to what you are paying out in insurance premiums, you will be in a far better position to ensure that the coverage you are looking for remains affordable.
