Has the cost of your business insurance gone up in 2023?
We’re all living through an ongoing cost of living crisis. But why should increased costs extend to insurance premiums?
In this post we’ll explore some of the underlying reasons that could explain the rise in your insurance premiums. We’ll also share some tips that could help you ensure you get the cover you need at a price you can afford.
How Do Insurers Calculate Your Premium?
When calculating your premiums, insurers consider the costs they might have to meet should you ever make a claim. When it comes to buildings insurance, they’ll consider the possible costs of repairs, and the possible costs of rebuilding – that is, were your building to collapse and require a total rebuild, how much would this cost?
What is a Building’s Declared Value (BDV)?
To calculate the costs of a potential claim, insurers refer to the Royal Institute of Chartered Surveyors (RICS) and their Building Costs Information Services. From this they can work out what any building’s declared value should be, and they can base their premiums on this.
A Building’s Declared Value (BDV) isn’t based on the value of the land the building stands on, or the desirability of its location. Instead, it takes into account everything that’s part of the property on the day the policy starts. This includes the bricks, the mortar, the plumbing, the wiring, the upholstery, the kitchen fittings, the bathrooms – the lot.
Why Are Buildings Insurance Premiums Going Up?
Due to the effects of Brexit and a number of enforced government lockdowns, the UK has experienced severe supply chain delays and significant labour shortages. This has in turn affected the cost of building materials and labour. So any repair or maintenance a building’s going to need in 2023 will inevitably cost more than it would have at the start of 2020.
And that’s a major reason why building insurance premiums have gone up. Buildings now cost more to insure because buildings now cost more to repair.
Can You Save Money on Business Insurance?
Insurers will consult the Building Costs Information Services to work out your BDV. This provides a reliable figure, but not necessarily the most reliable figure.
When did you last get your business premises surveyed? Hire a professional surveyor to inspect your property and they may be able to provide a more accurate value for your building’s repairing and rebuilding costs than your insurers could get from the RICS. If they’re able to provide a BDV that’s significantly lower than the value suggested by the Building Costs Information Services, then it could help you secure lower premiums.
But one thing you should not do is forego buildings insurance entirely, or else refuse to pay your insurer’s increased rates. If you do this, your insurer might refuse to renew your policy on the basis that you’re “recklessly underinsuring”.
Put simply, now is not the time to cut back on your insurance. But now is the perfect time to consult with an insurance broker. Talk to us and we’ll help you gain a better understanding of your insurance needs. We’ll help you ensure you don’t pay for cover you don’t need, without putting yourself at the risk of financial loss by not having cover you do need.
Read more about the benefits of working with Anthony Jones Insurance Brokers. And if you have any other questions, then don’t hesitate to get in touch with us.