Commercial Insurance for Start-Ups in 2013 2013

How does £1million of start-up funding and a route to cheaper commercial insurance sound? It seems 2013 could be a remarkable year for new ventures in the UK.

Northumberland start-ups will benefit from over £1million in funding, thanks to the North East European Regional Development Fund, Northumberland County Council and a development firm by the name of ‘Arch’.

The good news was revealed by local media outlets in the North East this month and will no doubt bring a warm wave of optimism across the region for budding entrepreneurs.

On top of that, these fresh businesses have the opportunity to get a tailored commercial insurance bundle from the outset, rather than settling on a generic policy. Such custom packages can come at a much cheaper rate, due to the omission of certain unnecessary features.

How to get cheaper commercial insurance

First off; business owners, MDs, CEOs – whoever is in charge of your organisation would be well advised to speak to a commercial insurance broker, before even comparing quotes online.

Why? Because the brokers specialise in tailoring policies. They can do so because of their position within the insurance sector; they’re strongly connected to multiple underwriters and through these relationships, can negotiate custom terms and (perhaps more importantly), custom quotes on your behalf.

All you need to do is have a chat over the phone about your new business or use an online form (most of the top commercial insurance brokers have this feature on their website).

Commercial Insurance in 2013

Nowadays, it doesn’t matter how niche your business may be – there’ll be a broker out there who can help mould a new policy around it for you.

Turn a few pages in the Insurance Times and you’ll likely find a report suggesting commercial rates are set to inflate during 2013 – largely owing to an increase in personal injury claims against established businesses.

There is a growing trend for former employees to file claims against ex-employers and so the market is paying out more than usual in compensation.

However, when you’re dealing with a broker, they’re operating on your ideal budget and will do everything in their power to get you a quality deal – despite premium increase patterns.

Final Thought for Start-Ups

Keep things simple. Get a broker to sort out your insurance needs and focus on the good stuff; planning the first two quarters, looking into budgets and predicting a time when you can start hiring new staff.

You’re the boss. Everything you do from this point on is related to making/saving you money. It’s that same attitude the brokers adopt – they want your business next year and the year after that; they’ll work around the clock to make sure you’re happy.

Sit down with some tea/coffee and fill out the commercial insurance form now (or call them up directly). You’ll have set the wheels in motion to get all the protection you need, for a quote you can afford, before you get to the bottom of your mug.

Natural Disasters: Impact on Commercial Insurance

When a flash flood strikes and causes almost £50 million in damages, it’s often referred to as an ‘act of God’. It’s difficult to apply that same term when science is involved…

Just weeks ago, a Russian rocket transporting a satellite into space malfunctioned and plunged into the Pacific Ocean. It’s still unclear what exactly caused the engine failure (currently described as an ‘abnormal situation’) but it will never be deemed as ‘fate’ by scientists.

The damage to the satellite resulted in a loss of approximately £254 million. Satellites can be insured – predominantly under ‘all risks except’ policies. Should Russia’s satellite have impacted on land and damaged business property, the owners of such establishments would have legally been able to claim.

This is far from an ‘act of God’ and is extremely rare but it’s nice to know you’re looked after against extravagancies such as space damage. When it comes to floods, lightning, fires etc, we should take business insurance much more seriously…

Flood Damage

Early January saw Cyclone Oswald strike Queensland, Australia; inflicting fatalities, injuries and property damage all over the coast. In the wake of the damage, over 6,000 claims were filed and the City of Bundaberg endured its worst ever flood – 1,000 properties completely swamped.

This is just one recent example of an ‘act of God’ occurring outside of the UK but with the wettest year on record just behind us, it’s time to up our own flood precautions.

Business Protection

So, just what does a commercial insurance policy offer you in terms of protection? With a broker, it depends on what you need. For example, you may require cover for external damages only, because your flood defences are adequate enough to prevent water from entering the property (it will take more than a few sandbags). In this situation, the broker can remove the contents feature from your policy and you save money.

For clarity’s sake, let’s take a look at what a standard protection package should include:

  • Property damage
  • Material damage
  • Business interruption

All the liability insurance is included too – protecting you against any lawsuits from customers or staff, but the above three are arguably the most important when it comes to natural disasters.

The exterior of the building can be in such a state, that the business becomes inoperable. Now, this is a world away from a satellite becoming inoperable as your business can be repaired and fit for trade within weeks. During the interim, the broker has your back for any income loss and so the holistic impact from an ‘act of God’ is cushioned by your commercial property insurance.

Commercial Insurance: The Importance of Full Disclosure

Insurers have a duty to protect your business for everything which you disclose in the policy but if you omit certain aspects, accidentally or not, it could result in prospective claims being rejected. Brokers can shoulder this responsibility for you.

Research shows that over the last 24 months, more than 10% of commercial insurance applicants have had a claim contested due to nondisclosure. It is accepted this is mainly owing to confusion and business owners not even realising it is their responsibility to disclose certain things on a policy. It’s an insurance act dating back over a century ago that obliges applicants to full disclosure…

The Marine Insurance Act 1906: “The assured must disclose to the insurer, before the contract is concluded, every material circumstance which is known to the assured, and the assured is deemed to know every circumstance which, in the ordinary course of business, ought to be known by him. If the assured fails to make such disclosure, the insurer may avoid the contract.”

A complete reform is already in discussion and we could soon see commercial insurance buyers required to disclose less information on their policy – shifting more responsibility onto insurers to look into the applicant data. If the insurer then fails to identify a certain detail, then it will be deemed as their fault.

Until then, brokers can take care of everything.

Professional brokers work closely with their clients and comb through every necessary detail to make sure the policy is transparent on both ends – the applicant and the insurer.

How does a genuine broker operate?

Much has been made of ‘ghost brokers’ by the media in recent weeks and there are fears genuine brokers could be caught in the crossfire. Always get in touch with a long-established business liability insurance broker to avoid falling victim to fraud.

Real brokers gather every bit of relevant information from the applicant, to thoroughly assess their insurance needs and level of risk.

In the meantime, their job is to develop strong relationships with insurance providers – via a range of mediums including face-to-face meetings. It is near impossible to build such relationships without that personal touch.

With the applicant details and custom policy at-hand, the broker can then negotiate with their contacts in the insurance sector for the best quote. They have more leverage when it comes to ‘haggling’ because they can commit to things like repeat business.

If the broker is also taking care of the disclosure side of things, again, all parties stand to benefit; the policyholder will never have claim refused on the grounds of non-disclosure, the insurer reduces the level of fraud (albeit sometimes accidental) within their customer base and the broker continues to develop a reputation as a reliable operator.