Common Business Insurance Renewal Mistakes to Avoid

Renewing business insurance can feel like another annual task. It is easy to accept a quote, make the payment and move on. But a policy that suited your business last year may no longer give you the right protection.

Your staff, turnover, stock, equipment, premises or day-to-day work may have changed. Your insurance may not have kept pace. This could leave you underinsured or with a gap in cover when you need it most.

A business insurance renewal is a chance to review your policy and correct old details. You can also check that the cover still suits your business. Here are some common mistakes to avoid.

Leaving renewal until the last minute

When the renewal date is close, there is less time to gather the facts. You may also struggle to compare options or deal with questions. This can lead to rushed choices or missing details.

Start the process several weeks before your policy ends. You may need new figures from your accounts, payroll or property records. You may also need details of new contracts. Giving your insurance broker enough time can make the review much easier.

Repeating last year’s details without checking them

Copying information from last year’s renewal form may save time. But it can also carry old mistakes into the new policy. Review every section instead of assuming that nothing has changed.

Check your business name, address and trading activities. Review your turnover, wage roll and staff numbers too. Then check your premises, vehicles, stock and equipment. You should also note changes to remote working, subcontractors, overseas work and the customers you serve.

Not providing full and accurate information

The Insurance Act 2015 applies when a business renews non-consumer insurance. It says the business must make a fair presentation of the risk. In simple terms, your information should be clear, accurate and complete enough for the risk to be understood.

Relevant facts may include new products, services or work methods. They may also include past claims or an incident that could lead to a claim. Changes to security or times when premises are empty may matter too. A breach of this duty can affect how a claim is handled. The outcome will depend on the facts and the policy terms.

If you are unsure whether something is relevant, raise it with your insurance broker. It is better to ask than to leave out information that may matter.

Using out-of-date values

The value of buildings, stock, machinery and other equipment can change. New purchases, higher material costs and rising repair costs can all make last year’s figures too low.

For commercial buildings, the sum insured should normally reflect the rebuild or reinstatement cost. This is not the same as the sale price. Stock and equipment values should also reflect what it could cost to replace them.

Underinsurance means the amount of cover is lower than the value at risk. This could reduce the amount paid after a claim, depending on the policy terms. Use current figures. Think about a professional valuation where needed.

Choosing the cheapest premium without comparing the cover

Price matters, but the lowest quote is not always the best fit. A cheaper policy may have a higher excess, lower cover limits or more exclusions. It may also leave out protection that another quote includes.

Compare the cover as well as the price. Check what is included and excluded. Look at how much you would pay towards a claim. You should also make sure the limits are high enough for your business.

Skipping the policy wording

Renewal documents may look similar from one year to the next, but the details can change. Read the policy schedule, wording, statement of fact and any endorsements. An endorsement can add, remove or change part of the standard cover.

Pay close attention to:

• cover limits and excesses

• key exclusions

• security and risk-management requirements

• geographical limits

• restrictions linked to certain work or activities

• how and when a claim must be reported

If a term is unclear, ask your insurance broker to explain it before you agree to renew.

Underestimating business interruption needs

Business interruption insurance can help when trading is hit by an event covered by the policy. It may cover lost income and certain extra costs. The exact protection depends on the wording.

A common mistake is choosing a maximum indemnity period that is too short. Recovery can take longer than expected. Premises may need repairs and machinery may need replacing. Planning permission or the return of customers can add more time.

Think about a realistic worst-case recovery time, not only the quickest repair. Check the financial figures and the events that can trigger the cover. Then check how long the policy could support the business.

Forgetting legal and contractual requirements

In Great Britain, most businesses that employ people must have Employers’ Liability insurance. The cover must be at least £5 million and come from an authorised insurer. There are limited exemptions, so check the rules for your business.

A client, landlord, lender or professional body may ask for other types of insurance. An industry contract may do the same. For example, a contract may set a minimum level of public liability or professional indemnity cover. Check these rules before renewal so your policy does not fall short.

Failing to think about the year ahead

A renewal should cover the business you plan to run. It should not only reflect the business you ran last year. Think about the next 12 months. You may move premises, hire staff or buy equipment. You may also launch a service, win a larger contract or sell in a new market.

Share these plans with your insurance broker. Some changes may need to be reflected from the renewal date, while others may need to be reported during the policy year.

Business insurance renewal checklist

Before you renew, take a few minutes to check that you have:

• started the renewal process early

• confirmed your business activities, turnover, wage roll and staff numbers

• updated the values of buildings, stock, equipment and machinery

• included relevant claims, incidents and changes in risk

• reviewed cover limits, excesses, exclusions and endorsements

• checked your business interruption figures and indemnity period

• confirmed any legal, regulatory or contractual insurance requirements

• asked questions about anything you do not understand

Make renewal a proper review

Business insurance renewal should be more than repeating last year’s policy. A careful review can help you spot gaps, update important details and choose cover that better reflects your current risks.

If your business insurance is due for renewal, One Call Insurance can help you review what has changed and understand the options available. Get in touch for a straightforward conversation about the cover your business may need.

Sources

• Insurance Act 2015: explanatory notes on the duty of fair presentation

• GOV.UK: Employers’ Liability insurance

• Association of British Insurers: insurance glossary

• FCA Handbook: ICOBS 4