Before you embark on your Business Insurance renewal, Paul Evans ACII, our Commercial Insurance specialist, gives some advice on how to ensure you get the right cover at the right price.
Like most purchases, it pays to shop around. The key is understanding where and how to buy your insurance product to ensure you get a great deal. Buying insurance can be tricky, especially Business Insurance because the consumer protection laws that protect you as a private insurance buyer do not extend into the commercial Business Insurance marketplace. You really need to read the small print and make sure you fully understand the quotation conditions to ensure you are not wasting good money on an insurance policy which will not pay your claims.
Business Insurance – The Chocolate Bar Principle
If you think of your Business Insurance as a chocolate bar, then you will quickly notice that all the products on the market are different. Some are bigger than others, some have better quality ingredients and there are a wide variety of prices. If you go out every year to buy a cheaper bar of chocolate, logically within a few years you will end up with a value brand product which is half the size of your original bar. It is exactly the same with Business Insurance. The Insurers need to make a profit and they cannot do so by giving the same cover and service at lower and lower prices. Over the years, the products have been subtly watered down and split into ranges of value through to luxury brands.
Consider it like this, if you need a quick fix to keep you going for a couple of hours until lunch then you might only need a small value brand chocolate bar. However, if you are not eating a meal until the evening, you might want a bigger more substantial bar to ensure it lasts through for the whole period you need it.
Business Insurance needs to be big enough and robust enough to last the whole year, whatever changes and challenges might be thrown your way.
How to do your shopping around – successfully
Shopping around means using an Insurance Broker, since the vast majority of Business Insurance providers do not deal direct with the customer. There are good reasons for this, mainly because of the complexity of each business and the variables affecting the Insurance required. The customer and Insurers need an experienced advisor in between to ensure the right cover is purchased. Unfortunately anyone can call themselves an Insurance Broker, whether or not they have the years of experience required to become proficient. Inexperienced advisers are commonly focused on the lowest price without giving any advice on the suitability of insurance cover provided.
That is why using an Insurance Broker like Butler Evans is so important, when shopping around you need to know that the product you buy is going to work. We are independent so that we can approach all the Insurers in the market to obtain quotes. Beware of Insurance Brokers who use a ‘specially selected panel of insurers’ which is merely confirming they will ONLY approach around four or five insurers who have agreed to give the broker a big share of your premium as a commission!
Another pitfall is using multiple Insurance Brokers. By using two brokers for quotations you are likely to create a situation where Insurers see your proposal twice and at best they will give each broker the same price. At worst, a good insurer who is busy because they are competitive, will just refuse to quote because they see it as a waste of time. The Sales Executives involved may enter into a dutch auction to win your Business Insurance, based solely on price, by the end of which you feel you have a great price, but everyone involved has lost track of whether the product you are buying is fit for purpose.
Why not separate the process and first invite different brokers to submit a proposal of services with customer recommendations so you can select a service partner you can trust. Then ask this Insurance Broker to do your shopping around at renewal time.
Top tips to guarantee you get a great deal on your Business Insurance
- Choose one Business Insurance Broker who you get on with and has access to all the insurers in the market and will therefore be able to do the shopping around for you
- Ensure this Insurance Broker has the right level of past knowledge and experience to help you buy the right product without under (or over) buying, otherwise either way you are wasting money
- Remember your business insurance needs to be fit for purpose for a full year and beyond, a cheaper product might fulfill your short term goals but could prove an expensive mistake in the longer term
To find out more about how to buy Business Insurance please email us at insurance@butlerevans.co.uk