How To Cut Your Insurance Premiums
Adam Bernstein on insuring the future
NOBODY likes bills, but bills for insurance shouldn’t be dodged; insurance is far less expensive than not being insured in the event of a loss. The bigger problem though, is that too few are switched on to the art of making savings.
Laura Marsh, partner in insurance specialist, PPS GI, says it’s important that business owners understand that ‘the market remains incredibly competitive and at times, the premiums quoted are in no way reflective of the risk insured.’
Nathan Scott, an account executive at JA Duffy & KL Barrett, an NFU Mutual representative, agrees with Laura Marsh: ‘Insurance markets are always price competitive, particularly where online insurers are concerned, but price ought not to be the primary consideration.’ He firmly believes that the question ought to be ‘am I adequately covered?’ The most reputable insurers may not be the cheapest, but the cover they offer is likely to be the most comprehensive and policy limitations least restrictive.
n Reducing premiums: The first step is to diarise the renewal date to allow plenty of time to seek new quotes. Once the renewal arrives it should be compared to the previous years’ price. If it’s risen, the insurer (broker) should be asked why.
The premium breakdown should be analysed. There may elements, say administrative fees, that have been added and they may be negotiable. Some elements could be unnecessary or are covered by another policy.
Premiums can be reduced in a number of ways, says Ms Marsh. ‘Effective risk management throughout the business is important and this will reduce the instances of claims and also protects your staff.’ She adds that it’s worth seeking out any discounts available to firms by virtue of membership of trade associations or any buying groups that they may belong to.
Businesses may be able to reduce premiums by increasing the excess and using insurance for only the more severe claims. But Nathan Scott suggests that the excess is often overlooked and customers should be smarter here – ‘it shouldn’t be so high that covering small losses becomes too expensive for policyholders.’
n Correct cover: Often it’s only discovered after the event that businesses are either underinsured or incorrectly insured. This concerns Mr Scott. ‘Deliberately under insuring is most definitely not a prudent way to attempt to lower premiums though and could leave you without adequate or any cover in the event of a claim.’
Ms Marsh points out ‘we find that many carry what is known as an office insurance policy and find that cover is deficient in many areas.’ She notes that risks may not be catered for correctly under a general policy – the right policy for the business and its sector is necessary. Ms Marsh also considers that accurate business interruption cover based on turnover or gross profit, depending on the business, is also vitally important.
Mr Scott also considers business interruption to be a ‘must-have’ and adds legal expenses and personal accident cover to the list.
For this reason, it is sensible to look at packaged policies that bundle a selection of relevant covers pertinent to the business into one policy. Indeed, Mr Scott says that ‘packaged policies designed specifically for the business type will always be cost effective, largely because liability cover is offered at a flat premium, rather than being calculated from actual turnover and wages figures, assuming the risk falls within upper limits usually relating to turnover, value of any buildings and number of employees.’
Legal expenses insurance can assist with employment issues and so is very useful; it can often mean that firms can reduce their costs where they are purchasing this separately.
There will always be conditions attached to each section of a policy and Ms Marsh recommends that policyholders should read their documentation thoroughly to ensure they comply.
All insurers have a minimum standard of security on premises they insure; this should always be checked for compliance. Also, insurers normally require notification of a claim within a required timescale in the event of a claim, usually 30 days.
n Good broker: It’s worth investing in personalised service and Ms Marsh believes that firms shouldn’t purchase their policy online ‘due to the nature of their business and the specialisms required in many forms of insurance.’
Being ‘caught out’ should not be an issue, reckons Mr Scott, ‘when using a reputable broker or agent with whom a face-to-face meeting has taken place and who has taken the time to explain and clarify all the T&Cs, as well as, perhaps more importantly, confirm what is not covered.’
Ms Marsh says the value of a good broker will become apparent when a claim is made: ‘it is crucial to have access to support staff who are experienced and who will understand the nature of the claim and can provide the relevant information immediately.’
Adam Bernstein is a financial journalist
This article has been reproduced from the Contract Flooring Journal website. You can find them at www.contractflooringjournal.co.uk.