Five things SMEs should consider when renewing commercial insurance

By Mark Thomas, below, Founder and Director, Compare My Insurance

Businesses of all sizes require an adequate level of protection to cover assets and mitigate risks should the unexpected happen. When the time comes to renew your existing commercial policies, it can be a great opportunity to re-evaluate your insurance, ensuring your current level of coverage meets the needs of your growing business. So, what are they key considerations for SMEs when it comes to insurance renewal?

Reassess your business needs

SMEs are continually growing and evolving, and as such, the chances are your business has undergone significant operational changes that may impact the type of insurance you now require.

Make note of any changes you have made to your business model or operations, such as opening new commercial premises, expanding into different marketing, changes to your workforce or implementing new services and technologies.

Each of these things can impact the insurance you are legally obligated to take out, such as in the case of employer’s liability insurance or commercial vehicle insurance. They are also useful indicators of where your policy may benefit from additional protections, such as in the case of cyber threats.

Review existing policies

SME Publications/ SME XPO 2024

Renewing your insurance is the perfect time to audit your current insurance portfolio and determine whether it still aligns with your needs. Take the time to gain a full understanding of what your policies provide in terms of costs, coverage, and policy limits, to help you decide whether this level of coverage is still appropriate.

This is time well spent, as of the 4.3 million SMEs currently operating in the UK, 80% are estimated to be underinsured.

You may want to reassess your commercial property cover, for example, to ensure it is still inline with current market values or the cost of meeting building regulations. Similarly, it’s a good idea to ensure that your overall assets are adequately covered – particularly if you took out your insurance when the business was initially started and did not increase the amount of coverage as it grew.

Conduct a risk assessment

A recent report from Hiscox found that nearly 1 in 3 SMEs lack a risk assessment policy, leaving them wide open to potential dangers and liabilities, and impacting the efficacy of determining both risk mitigation strategies and suitable levels of insurance coverage.

Carrying out a comprehensive risk assessment across all areas of your business is essential for determining the level of coverage you require from your insurance policy, as well as identifying potential risks that may have been overlooked since your policy was first taken out.

Before renewing your insurance policy, it’s vital to determine your risk exposure in terms of liability claims, employee health and safety, transportation and logistics, supply chain disruptions and property damage, as well as industry specific risks and those associated with the implementation of new technologies.

Find competitive quotes

SMEs represent a sector with wide and varying needs when it comes to insurance. Many of the insurance packages and products aimed at very large businesses will simply not provide a good fit. Every business is unique and has specific needs that cannot be met through a one-size-fits-all approach.

Having re-evaluated the needs of your business and determined the level of coverage you require, it is vital to consider all of your options to ensure you are getting the coverage you need at the most competitive cost available.

Insurance brokerages are useful for expediting this, securing appropriate coverage, streamlining the somewhat arduous administrative processes associated with insurance renewal, and flagging opportunities to bundle various policies together to minimise gaps in coverage.

Perform regular audits

Though insurance can be complex, it should not be a one-time consideration. Businesses rarely remain static, so it makes little sense for your insurance to do so either.

Performing regular assessments of where your business is in terms of potential risks, liabilities and operational changes that might impact the level of protection you need is central to ensuring you are properly protected for all eventualities.

While you may choose to do this at regular intervals, such as annually, it is also a good idea to schedule in audits whenever significant changes to your business occur, such as entering a new market or opening new commercial premises.

Final thoughts

Keeping up to date with the evolving insurance needs and requirements of your business will help you avoid being blindsided when the time comes to renew your cover, as well as enable you to make an informed decision about the insurance options available, and level of coverage you require as your business continues to grow.

SME Publications/ SME XPO 2024