How Much Does Small Business Insurance Cost?

How Much Does Small Business Insurance Cost?

How Much Does Small Business Insurance Cost? 900 507 James Hallam

In this post we will discuss how much small business insurance costs in 2024. We will explore some of the factors that affect the cost of cover, along with some strategies for reducing your premiums.

Is Business Insurance Getting More Expensive?

A recent report by the Federation of Small Businesses revealed that around 60% of small businesses had seen their insurance premiums rise in the past year. What’s more, 52% of these businesses have seen a rise of 11% or more.

There are many reasons for the rising costs of small business insurance. Enforced government lockdowns during the pandemic forced many small businesses to make business interruption claims, which may have raised the cost of cover for all. Plus, the UK’s been hit by soaring inflation in recent years, which for many will have made a difficult situation even worse.

What Can Affect The Price of Small Business Insurance?

A number of things can affect the price of your small business insurance:

  • The size of your business. Generally speaking, the larger your workforce, the more you’ll pay for cover. However, insurers sometimes offer group insurance policies to cover employees who face similar risk profiles, which means that some larger businesses may be able to get a discount on their cover.
  • The industry you work in. Businesses in certain industries face different risks than others. For example, builders and architects may have to pay more for cover than, say, marketing agencies, as the risks associated with their work are much higher.
  • The people you’re covering. Different members of your team will face different risks, too. For instance, it will probably cost more to cover warehouse staff than office staff, as warehouse staff face a higher risk of injury.
  • The area you operate in. Businesses based in London and other major cities may have to pay more for cover than businesses located in less populous areas.
  • Your claims history. Unfortunately, if your business has ever made a claim on your policy, it can raise the cost of your premiums. It largely depends on the frequency of the claims, and the severity.

How Much Does Small Business Insurance Cost – Rough Estimates

The cost of cover can vary greatly from business to business. Market conditions can also affect the price of premiums. So, please treat the following as rough estimates only. For a more accurate idea of how much you should expect to pay for small business insurance, get in touch for a free quote.

All of our figures are based on the averages provided by the finance and lending research and information specialists at Business Financing.

  • Public Liability – On average, small businesses pay £118 a year for public liability cover. Yet depending on the business, the actual premiums can be as little as £50 a year, or as much as £5,000 a year.
  • Professional Indemnity – Small businesses can pay as little as £115 a year for their professional indemnity cover. However, Business Financing reports that businesses working in certain high-risk industries may need to pay up to 10x more.
  • Employer’s Liability – As we mentioned above, it will cost a different amount to cover different employees based on the work they do. For desk-based workers, you might expect to pay £60 per year for employer’s liability. Yet for any employee who does physical labour, this can rise to over £200 a year.

These are just three of the most common insurance products that small businesses might need. The more cover you get, the more you will need to pay. See the full cover available through James Hallam.

How to Reduce The Cost of Small Business Insurance

When it comes to insurance, your priority should be to get the cover you need, and not to make your premiums as low as possible. But there are a few things you can do to reduce the cost of your business cover:

  • Pay annually, rather than monthly. Some insurers offer small discounts if you pay for your cover in an annual lump sum, rather than in monthly payments.
  • Choose a different level of cover. You have a legal requirement to get some forms of cover, such as employer’s liability insurance. Beyond your regulatory obligations, the amount of cover you get is entirely up to you.
  • Pay a higher excess. Offer to pay a higher excess in the event of a claim, and you can reduce your monthly premiums.

However, there are serious risks associated with each of these money-saving strategies. Paying annually for your insurance can lead to cashflow issues. Intentionally choosing less cover can leave you vulnerable to underinsurance. Paying a higher excess could lead to trouble if you ever need to make a claim on your policy, as it will mean that your settlement could be less than you need.

Talk To James Hallam About Your Small Business Insurance Needs

James Hallam is an independent Lloyd’s broker with a dedicated team of experienced insurance professionals who are committed to getting you the cover you need at a price you can afford.

Talk to us, and we can help you ensure you have enough cover to protect your business, at a fair price. We will take the time to understand your risks so we can tailor a flexible SME insurance package that offers full cover at outstanding value.

Get in touch for a free quote today.