What affects the cost of business insurance?
Calculating your business insurance
When buying business insurance, you’ll want to make sure you’re getting the best price and the right amount of cover for your needs.
But if you’ve ever filled out a quote for insurance multiple times before, you may have noticed that the price can change depending on the details you enter.
That’s because the cost of insurance changes based on certain factors.
How much is business insurance?
Let's look at some of the things that make the cost of premiums change.
Type of cover
The primary price-deciding factors are: what you’re getting cover for (which will determine the type of cover you need) and the level of cover you’re getting.
Essential liabilities for a business are covered by public & products liability insurance as well as employers’ liability insurance. As these are the policies most bought by businesses, you can find excellent cover at a good price in minutes.
Generally speaking, insurance that covers your first-party risks (damage to your property or business interruption, for example) costs less than cover for third-party liabilities (such as professional indemnity, directors and officers and cyber insurance).
Period of cover
Insurance is typically priced as an annual premium, but you can choose our monthly coverage to provide you with additional flexibility.
Many people think that annual policies are cheaper, but our monthly subscription works out to be the same price as annual cover, so you can still get the same value while paying for your insurance in a way that suits you.
Risks to a business must be considered within the context of the industry and environment they work within. Trades with higher risks, such as working from height or with hot tools, may increase the premium your business may pay.
The size of your business
This is determined by your revenue and number of employees in your business.
Higher revenues with larger workforces generally increase the premium of your insurance.
Our online portal allows you to amend the revenue or employee count for your policy at any time, for free, so you can be sure you only pay for what you need.
The location of your business
Due to various small factors, some areas of the country may warrant a higher or lower premium, depending on our experience of past claims. This difference is often very small between our policies.
Your claims history
If your business has had previous insurance claims, you must tell your new insurer at the time of purchasing a policy with them.
These will be assessed on their circumstance and size to understand the risks of the business in better detail.
Small claims typically don’t increase future insurance premiums.
As with other types of insurance, the excess (or deductible) - the amount you agree to contribute towards each claim - will impact the premium (the amount you pay for your cover on a monthly or annual basis). A larger excess will result in a smaller premium, and vice versa.
Insurance Premium Tax (IPT) is currently 20% for UK businesses. Government changes to the tax rate may change your premium amount year on year.
Once you've completed a quote, you'll be able to view a summary of cover. Please always refer to your policy documents for full details around exclusions, terms and limits of your customised cover.
Our insurance 101 guides answer more of your public liability questions.