Insurance is an extremely wise investment for the future of any business, but it’s something that many companies resent paying.
So what exactly goes into deciding how much a premium comes to, and how can you reduce the amount you pay?
Do I need business insurance?
The business world is populated with endless diversity across a myriad of sectors. However, one aspect which links all businesses is the need for adequate insurance. Protecting your company against unexpected losses is vital for its long term viability, as one simple mistake or accident—from stolen property to customers claiming compensation from you—could see you facing financial trouble. Whatever the loss, it’s essential that you have the right insurance in place to transfer the cost of it away from your business.
What does business insurance cover?
Here at Tradesman Saver, we offer public and products liability, legal expenses, financial losses, and accidental death cover as standard. You may also want to go for some of our optional covers, such as tools and equipment insurance, short term income protection insurance, and employer’s liability insurance.
Isn’t business insurance expensive?
Not necessarily. Our premiums start from just £59 a year. However, while we can promise affordability, we can’t say exactly how much your cover will cost, as this depends on each company’s unique circumstances. What we can do is show you how we calculate premiums, which can give you a rough idea of what your own company’s cover might come to.
How does Tradesman Saver calculate insurance premiums?
When we give a quote for business insurance, we assess the level of risk your work involves, and how likely it will be for you to claim on your policy. Based on these calculations, we’re able to work out which risks to insure and how much we should charge in premiums to take you on. This means that, should your company be deemed high-risk, your premium will be higher.
That said, your final premium is not calculated on risk alone, and factors like the amount of cover you require also come into play. However, it would be unwise to reduce the breadth of your cover purely as a cost-cutting measure. If you are under-insured in the event of a property insurance claim, you could end up losing a lot more money overall. It would also be ill-advised to select too low an indemnity limit. Aside from the fact that you could be under-insured in the event of a compensation claim being made against you, sometimes certain jobs will contractually require you to have a certain limit.
What factors do Tradesman Saver take into account?
What your business does
A carpet cleaner is not faced with the same dangers as a roof tiler, just as a door fitter’s job is much less risky than that of a cladding contractor. As such, roof tilers and cladding contractors can expect to pay higher premiums than carpet cleaners and door fitters. Our calculations also take into account factors like whether you use potentially dangerous tools (such as welding equipment or power-driven woodworking machines), if you engage in hazardous activities (like piledriving or mineral extraction), and whether you undertake work in potentially dangerous locations (such as refineries, aircraft, and viaducts).
How experienced you are
At Tradesman Saver, we look at how long a business’s principal owner, director, or partner has been running the company, as well if they have any previous experience leading a similar business within the same industry. If you have significant experience in your sector, you’re deemed to be lower risk than somebody who’s just started out.
How many employees you have
The more people you employ, the greater risks you carry and the more potential liability you have should something go wrong. This ups the amount of coverage you need and, in turn, how much you will have to pay. Labour-only contractors are also considered employees for insurance purposes, and will be taken into account when calculating your final premium. This is not the same as bona-fide contractors, who aren’t legally regarded as employees. The difference here lies in how closely the subcontractor is integrated within your business—for instance, labour-only contractors typically use a company’s tools and work under its direction, while bona-fide contractors use their own tools and work independently.
Your claims history
If your business has a substantial claims history, we will deem you more at risk of claiming in the future, and increase your premium accordingly.
The amount of cover required
All of our insurance premiums come with a minimum amount of cover which you can increase should you feel your business requires greater coverage. For instance, the minimum public and products liability cover we offer is £1 million, but this can be increased all the way to £5 million. While this does give you greater protection, you’ll have to pay more for it.
How many optional policies you want
The more optional policies you want, the higher your premium will be—it’s a bit like adding features such as heated seats or custom wrapping to a car.
If you have any further questions about how we determine the cost of your business insurance, don’t hesitate to get in touch with us today.