Can you reduce your expenditure on commercial property insurance?
It is possible and here are the answers to some of the frequently asked questions on this and related subjects.
Can I save money by opting for a higher voluntary excess?
Yes or at least ‘possibly’.
The excess is an amount of money that you offer to pay yourself as the ‘first part’ of any future claim. This is a very widespread insurance tool and it usually comprises two parts – that which is a mandatory minimum and another which is voluntary.
Typically if you agree to a voluntary excess in addition to the compulsory minimum, your premiums may reduce.
Note that not all policies offer a voluntary excess facility.
What about cost reductions for best practice?
This expression is sometimes used to describe commercial premises that take extra security precautions such as arranging for 24×7 onsite supervision or the installation of CCTV security devices etc.
It’s difficult to be very precise because a lot will depend upon the nature of your policy. During the discovery phase of any insurance proposal, a specialist provider of commercial property insurance may draw to your attention any areas where you may be able to reduce the premium by taking certain steps.
What is the ‘no-claims incentive’?
This is another very common feature of most types of insurance. For example, in motor policies it’s commonly known as the ‘no claims bonus’ but it is not restricted to road-type cover.
It essentially means that some commercial insurance providers will encourage policyholders not to make claims for relatively small amounts. They do so by offering discounts on next year’s premium if you have not made any claims in the year previously.
Contrary to some mythology, this is not just to avoid paying out on claims. It’s driven by the desire to avoid the administration overhead of large numbers of claims for relatively small amounts, given that it may cost the same to process a claim of £50 as it would one for £5,000.
The lower an insurance provider’s overall costs are, the lower they can keep their premiums. This also partly explains why the excess exists too.
So, everyone can benefit through these sorts of incentives though do note that not all policies offer such.
Are there any other ways to reduce my commercial insurance costs?
You might wish to consider one or more of the following:
- ask your broker or insurance provider to highlight any options for doing so – they’ll usually be the best placed person to offer advice;
- if you have multiple commercial properties, you might wish to consider looking at portfolio insurance options and consolidation into a single provider on the basis that you’ll have more commercial leverage;
- avoid simply defaulting into automatic annual renewal mode. Yes, it’s easy but new products and opportunities for savings are coming along all the time. A good broker should be able to keep you aware of what’s happening and how it might benefit you.