What does business insurance cost?
There is no fixed price for business insurance. Here is what drives the premium, and five ways to make sure your company doesn't pay too much.
Business insurance is priced individually. The price mainly depends on what the company does, how big it is, how much property it needs to protect, its claims history, and the deductible and add-ons you choose. That is why two companies with the same turnover can pay very different amounts.
What drives the price
The insurer tries to estimate how likely it is to have to pay out, and how much. That estimate is what you pay for.
Industry and type of business. Often the biggest factor. A company that works on clients' premises, handles hazardous materials or gives advice where large sums are at stake carries a higher risk than one that does not.
Size. Turnover, payroll and headcount are often used to calculate the premium for liability and business interruption.
The value of what is protected. The more furniture, machinery and stock, the higher the premium for the property part.
Claims history. A company that has had many or large claims usually pays a higher premium, and fewer claims can earn better terms over time.
Your choices. The deductible, the limits and which add-ons you include.
Example: Same turnover, different risk. A management consultant and a carpenter have the same turnover. The consultant has a laptop and an office, but runs the risk that bad advice costs a client a lot of money. The carpenter has valuable tools in the van and works in other people's homes. Their premiums differ, and they are spread across completely different parts of the policy.
Five ways not to pay too much
- Insure the right values. If your equipment is still insured at a figure from when the company started, the premium may be too high, or the cover too low.
- Remove double cover. It is common for the same thing to be insured twice, such as business travel in both the business insurance and through the company card.
- Choose your deductible deliberately. A higher deductible can lower the premium. That can make sense if the company can absorb a smaller loss itself. The guide how to choose your deductible shows how to work it out.
- Keep your details up to date. If turnover has fallen or the business has changed, the premium should reflect it.
- Compare before renewal. Policies often renew automatically year after year. Going through what is included and comparing with the market is the simplest way to see whether the price is reasonable.
Good to know. The cheapest is not always the best. A lower premium can mean lower limits or more exclusions. Compare what is included, not just what it costs.
Frequently asked questions
Is business insurance tax-deductible?
Premiums for insurance that belongs to the business are normally a deductible expense for the company. Ask your accountant what applies to you.
Why does the premium go up when we haven't had any claims?
Premiums are often adjusted to an index every year, and insurers can also raise prices when claims rise across a whole industry. That is why it is worth comparing before renewal.
