Cheap Premiums Are Great, But The Cost To Your Business Could Be Far Greater
Times are hard at the moment – small businesses are being squeezed from every side; customers want more and more for less and less, suppliers are hiking the cost of raw materials and inflation is running rife so any money they do make feels like less at the end of it all.
Little wonder then that businesses are scrutinising their cost base more than ever before and cutting the cost of their insurance bill seems like an easy option- after all, you pay out all this money every year and when it comes to claim, they aren’t going to pay out anyway, so why bother? Besides, it’s never going to happen to you, right?
Brokers in turn are responding to this- driving premiums ever lower in desperation to keep their customers. Every conversation is “the markets soft, we can save you money”.
However, I wonder how many businesses have stopped to consider the potential impact on their business if the insurance is wrong, rather than just looking at the bottom line
Now I am not naive enough to say that insurers are always ready with a lovely cheque when the worst happens, but the fact remains that the vast majority of unpaid claims are down to the cover not being arranged correctly, rather than insurers being unwilling to pay.
I see a large number of local businesses in the Thames Valley and a large number either didn’t have any cover in certain critical areas, or worse had the cover but was arranged incorrectly, so they were effectively paying money for nothing.
Here’s a few examples from the last 2 weeks:-
- A local glazing company who proudly showed me all round his new showroom; total cost £60,000. His schedule had no cover for tenant’s improvements and therefore no cover.
- A builder specialising in extensions with no contract works cover (so no cover for any materials on site) worst case scenario, potentially a £50,000 loss uninsured.
- A local air conditioning company who told me he had portable hand tools cover- he certainly did. There was just one problem- they were only covered at his premises not away from it- total potential loss £10,000
- A manufacturing company with a £2m turnover and reliance on one manufacturing plant- no business interruption cover – if the premises had burned down that night, they literally would have had no business. Total cost???
The cost to put these errors right? In all cases less than 20% in additional premium and in many cases no cost at all.
All these were reputable businesses, well run well managed who had worked hard to build their business up- they paid their premiums and thought they were protected. All were loyal to their current brokers and had been with them for over ten years.
The reason I was able to discover these issues? Simple; I took the time to visit them, discuss their business and understood the risks involved. Most of the above had never seen their broker and those that had the conversation was always around premium.
So the next time someone gives you a call guaranteeing you 20% off your premium, stop and consider- that 20% may well be the difference between you having a business and not.