Business insurance excess amounts in quotes
You may be looking for a business insurance quote for a couple of reasons. Usually, this is either for a new business, or to compare against an existing renewal quote. Within this quote, you need to look closely at the business insurance excess amounts.
The one thing you cannot do, is look at the premium quoted in isolation. Understandably, your aim is to get a competitive quote, but this needs to be for the right cover.
A saving of 10%, for example, may appear good, initially. However, if the cheaper quote has more onerous terms and conditions, it may end up costing more if you have a claim.
Sections of cover, within a policy
One of the areas you do need to consider, is the level of excess. Business insurance policies will contain a number of different excesses, depending on the section of cover. Let’s consider an example shop insurance quote. Most commercial insurance companies provide standard shop package policies, which have the same sections of cover. A typical shop insurance quote will contain these sections of cover:-
Property damage – for buildings, general contents, computer equipment and stock
Business interruption – for loss of profit, following an insured event (such as theft or fire)
Money – for cash on the premises and whilst being carried to, or from, a bank
Employers, Product and Public Liability
Glass – for windows, frames and lettering
Signs, blinds and canopies
Goods in transit – for stock moved in your own business vehicle
Portable equipment – for laptops, smartphones and tablets whilst not at the business address
Commercial legal expenses
Each of these parts of the policy may have a different excess applicable.
What is a business insurance excess
Business insurers, understandably, do not want to deal with every single claim. A shop policy may contain accidental damage cover. This would cover damage caused when moving goods. If they supply furniture and a table leg is damaged, they could fix or replace this for a small amount of money. It is probably not worth the time, to submit a claim for, say, £40, to the insured. For their business insurance broker and insurer, there will also be administration costs, in dealing with a low value claim.
For this reason, policies contain excesses. They are there to reduce the claims cost and administration for insurers, but they can also save the insured money.
A standard excess would be around the £200-£300 mark. Anything less than this and a claim cannot be made. If the claim cost is slightly higher than the excess, the insured may still choose not to claim.
Increased excess amounts
If we go back to our shop insurance quote, there are some sections of cover that are more likely to suffer a claim. These would be glass, money and signs, blinds and canopies. Shop front glass is susceptible to damage, particularly from malicious acts or an attempted break in. Money is the main target of most thefts from shops. Signs, blinds and canopies are easily damaged by heavy winter storms.
Some insurers may offer a cheaper business insurance quote, but their excess levels are very high.
In 2018, a shop insurance policy would expect an excess of around £100 for money claims and £200-£300 for glass and storm damage.
If the shop owner is looking for a quote, they may get one from insurer A at £600 and insurer B at £695.
Insurer A may have different business insurance excess amounts. If the shop owner goes with the cheaper quote, they’ve saved £95. Now let’s look at a claim they may have for a damaged shop window. The claim is for emergency boarding up and window replacement for £400. Insurer A’s excess is £300, compared to insurer B’s at £100. As soon as this claim is submitted, the shop owner has lost money. Their £95 saving is gone, along with £105 extra to make up for the excess difference.
The reason for buying business insurance is to provide financial recompense in the event of a claim. Not every business submits a claim on a regular basis. But, when a claim is submitted, it is much better knowing that you’re not going to be out of pocket because of an unhealthy excess.
If you use a broker, they should point out to you, clearly, the excess levels. If they are considerably higher than the business can realistically afford, it may be better to get a slightly more expensive quote.