Insurance is a cost that most businesses resent paying, although if they need to make a claim, they often suddenly decide that rather than being a cost, insurance is actually a sensible investment.
One of the most popular ways businesses can protect themselves against unforeseen circumstances is by seeking liability insurance, which refers to any type of insurance policy that protects a person or business against a risk for which they may be sued – public liability insurance is a popular example of this.
So, how much does business insurance cost in the UK, and how can you reduce that cost?
Business Insurance Cost
When an insurer is calculating the price for your insurance cover, they will consider a number of factors including:
- The likelihood that you will make a claim
- The likely amount of any claim(s) that you make
- Their administrative costs
- Their profit margin
Clearly, there’s very little that you can do to reduce an insurance company’s administrative costs or the profit margin that they choose to work to, but your insurance broker will be able to shop around to find an insurer that keeps their administrative costs down and is happy to settle for a lower profit margin. This will result in lower insurance costs.
You can, however, do things that will affect the likelihood that you will have to make a claim and do things to reduce the potential size of any claim(s) that you might have to make. This will also result in lower insurance costs.
Reducing the likelihood of an insurance claim
There are many things that you can do to reduce the likelihood that you will make a claim. The most obvious is not buying insurance, although that would leave you uninsured in the event of a loss.
However, you can also do things that make your business safer. This could include:
- Doing risk assessments
- Getting any relevant training
- Improving the security at your business premises
Reducing the potential costs of any insurance claims
It would be unwise to reduce the sums insured in your property insurance policy to save money on your insurance costs because if you are underinsured in the event of a property insurance claim, you will be penalised.
It would also be unwise to select too low an indemnity limit in your liability insurance policy. Aside from the fact that you could be underinsured in the event of a compensation claim being made against you, sometimes you are contractually required to have a certain limit.
However, in the same way that you can reduce the chance of a loss occurring, you can take steps to minimise the potential impact of a loss.
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