7 Things Every Business Owner Should Check Before Renewing Their Insurance
7 Things Every Business Owner Should Check Before Renewing Their Business Insurance
Most business insurance renewal conversations start with the same question:
“Has the premium gone up compared to last year?”
While price is important, it’s only one part of the picture.
After more than 30 years reviewing business insurance programmes for companies of all sizes, I’ve learned that the biggest insurance mistakes rarely come from paying too much premium. They usually occur because something has been overlooked during the renewal process.
Insurance renewals should never be treated as an administrative task or a box-ticking exercise. They are an opportunity to assess whether your insurance arrangements still reflect the risks facing your business today.
Here are seven of the most important things I recommend every business owner reviews before accepting a renewal.
- Look Beyond the Price and Assess the Quality of the Insurer
Many businesses focus heavily on the premium and overlook the insurer behind the policy.
A lower premium may look attractive, but when a significant claim occurs, the quality of the insurer becomes far more important than the price paid.
Ask yourself:
- Does the insurer have a reputation for handling claims fairly?
- Are claims paid promptly?
- Is the insurer financially secure?
- Does the insurer have experience within your industry?
An insurance policy is ultimately a promise to pay a claim. The quality of that promise matters.
When comparing quotations, always consider the insurer’s track record and not just the annual premium.
- Pay Close Attention to Policy Endorsements
One of the biggest misconceptions in business insurance is that sums insured tell you everything you need to know about a policy.
In reality, some of the most important differences between policies are hidden within the endorsements.
Endorsements can:
- Restrict cover
- Add conditions
- Remove cover
- Change claim settlement provisions
- Introduce warranties and obligations
Two policies may appear identical on a summary page, yet provide very different levels of protection because of the endorsements attached.
In many cases, endorsements determine the true quality of the cover.
- Don’t Ignore the Small Print
Many endorsements are buried deep within renewal schedules and policy documentation.
Unfortunately, these are often the sections clients spend the least amount of time reviewing.
The problem is that endorsements rarely become important until a claim occurs.
I’ve seen situations where businesses believed they were covered, only to discover a restriction or condition applied that had been overlooked for years.
When reviewing your renewal, ask your broker:
“Have there been any changes to endorsements or policy conditions compared with last year?”
It’s a simple question that can potentially prevent a costly surprise in the future.
- Review Your Sums Insured Carefully
Underinsurance remains one of the biggest risks facing businesses.
Many organisations update their premiums each year but fail to update the values underpinning their policies.
Particular attention should be given to:
- Buildings
- Equipment and machinery
- Stock
- Contents
- Business interruption sums insured
The area I see underestimated most often is Business Interruption Insurance.
Many businesses do not fully appreciate how long it would take to recover following a serious fire, flood or other major loss.
Getting this figure wrong can have serious consequences when a claim occurs.
- Benchmark Your Insurance Arrangements Every 1-3 Years
Even if you’re happy with your current insurer, it’s sensible to periodically test the market.
How often depends on the size and complexity of your business, but as a general rule:
- Smaller businesses may benefit from a market review every 1-3 years.
- Larger or more complex businesses may wish to benchmark every 2-3 years.
Obtaining alternative quotations isn’t always about finding a cheaper premium.
It can help you:
- Compare cover levels
- Identify policy enhancements
- Understand changes in insurer appetite
- Confirm your programme remains competitive
A market review provides valuable insight and helps ensure your insurance arrangements remain fit for purpose.
- Avoid Using Too Many Brokers
This advice often surprises people.
Some businesses assume that approaching numerous brokers will increase competition and improve outcomes.
In reality, the opposite is often true.
If multiple brokers approach the same insurers, markets become blocked and confusion can arise.
Insurers may become reluctant to spend time reviewing a risk if they believe several brokers are circulating the same information or often it ends up being slightly different information.
In most cases, I recommend working with no more than one or two brokers when testing the market.
This keeps the process controlled, professional and more likely to achieve the best outcome.
- Treat Your Renewal as a Strategic Review, Not an Administration Task
The best insurance reviews involve far more than simply checking the premium.
Renewal should be viewed as an opportunity to discuss:
- Business growth
- New contracts
- Changes in activities
- New locations
- Staffing changes
- Acquisitions
- Emerging risks
- Regulatory developments
- Future plans
A good insurance review should look both backwards and forwards.
It should assess whether current arrangements remain appropriate and identify any changes needed for the year ahead.
Businesses evolve constantly. Your insurance programme should evolve with them.
Final Thoughts
After more than three decades advising businesses, one lesson has remained consistent:
The cost of insurance is rarely what causes problems. The gaps in cover that weren’t identified at renewal are usually what lead to difficulties when a claim occurs.
A renewal should never be viewed purely through the lens of price.
The quality of the insurer, the scope of cover, policy endorsements, adequacy of sums insured and the advice you receive can all have a far greater impact on the outcome of a claim than a marginal difference in premium.
Taking the time to undertake a proper review each year could be one of the most valuable investments you make in protecting your business.
Frequently Asked Questions
Quick Summary
When reviewing a business insurance renewal, don't focus solely on the premium. Check the quality of the insurer, policy endorsements, sums insured, business interruption cover, market competitiveness and whether your insurance programme still reflects the current risks facing your business.
