Do you feel like your business insurance is getting more expensive? You’re not alone. In this post we’ll discuss some of the underlying reasons behind why business insurance is more expensive.
But one thing to bear in mind – in these uncertain times, working with an insurance broker can help you get the best possible value for money from your business insurance. Find out how we can help you get the cover you need at a competitive price.
Has Business Insurance Got More Expensive?
For many businesses in the UK, the cost of business insurance has gone up in the past year or so. And unfortunately, as we make our way through an ongoing cost of living crisis, business insurance premiums are likely to remain high for some time yet.
Why Is Business Insurance More Expensive?
In October 2022, UK inflation hit a 41-year high of 11.1%. By June 2023, the inflation rate had fallen to 7.9% – the slowest it had been in over a year. And while this was undoubtedly a positive development, the nation is still dealing with excessive inflation rates.
High inflation will impact the price of almost all goods and services. Most people will notice a sudden rise in the cost of fuel or food almost immediately. But it may take a while for the full implications of high inflation rates to set in. Businesses, for example, will likely only notice how high inflation will impact the cost of insurance when it comes time to renew their policies.
Why Does Inflation Make Business Insurance More Expensive?
Insurers calculate premiums by considering how much they might have to pay out if you ever make a claim on your policy.
Buildings Cover is a major part of most business insurance policies. With this, insurers will cover you for any costs associated with repairing or rebuilding your business premises following fire, flood, or theft.
When calculating buildings cover premiums, insurers consider a building’s declared value (BDV). This is essentially a measure of how much it would cost to totally rebuild your premises following a total collapse.
The BDV figure’s not based on the value of the land on which your premises stands, nor on the desirability of the location. Instead, it’s based on the building’s many constituent components – that is, all the bricks, steel, timber, and other materials that make up your premises.
So What’s All This Got To Do With Inflation and Business Insurance Costs?
As we mentioned above, high inflation rates affect the price of almost all goods and services. All of this will affect your business premises’ BDV. As a result of inflation, should you make a claim on your policy, insurers will have to pay much more for the various materials required to make the necessary repairs or renovations.
At the same time, the UK is still learning to live with the effects of Brexit, and the aftereffects of numerous lockdowns. Combined, these have served to create widespread labour shortages, as well as severe supply chain delays, which will further drive up the costs of building materials.
With all this in mind, insurers are facing huge costs for any business claim they’ll have to process. They’ve responded through raising the price of their premiums. And this is how high inflation rates impact the cost of almost all goods and services. It’s like a snowball effect.
How To Save Money on Business Insurance in 2023 and Beyond
In a period of high inflation, it’s basically inevitable that you’ll have to pay more for the cost of cover. But there are still steps you can take to get the best possible value from your business insurance.
For instance, you could hire a professional surveyor to inspect your business premises. They might be able to provide a reliable and up-to-date value for your premises’ repairing and rebuilding costs, which could encourage your insurer to recalculate your premiums to reflect your situation.
Why Working With an Insurance Broker Can Help
Working with an insurance broker can also make a huge difference. At Anthony Jones, we’ll take the time to get to know you, your business, and all the risks you’re currently facing. We’ll then work to find you an insurance package that truly meets your needs. You won’t pay for any cover you don’t need. But at the same time, we’ll help you avoid having any gaps in your cover so as to avoid the risks of underinsurance.
Read more about the benefits of working with Anthony Jones Insurance Brokers. And if want to talk about how we can help you get true value from your business insurance, don’t hesitate to get in touch with us.