Unveiling the Mysteries of Business Insurance

There are many myths about business insurance that can leave owners unsure of what cover they really need. Some believe it’s only for large companies, while others think a standard policy protects them from every risk. The truth is more complex. In this guide, we break down some of the most common myths on the topic. We explain the reality and how understanding it is essential for protecting your organisation.

Myth 1 – Going out to market every year gets the cheapest prices.

It might seem sensible to shop around every year, but it can backfire. Underwriters often lose interest when they see the same risk repeatedly. The number of people working in insurance has fallen in recent years. With many underwriters only quote when they believe they have a good chance of winning the business. If your details come across their desk year after year, they’re less likely to offer their best terms.

By contrast, when an insurer hasn’t seen your risk for a while, they tend to be more engaged and may offer better pricing or cover.

Myth 2 – All policies are much the same.

No two policies are identical. Small details, such as extensions or exclusions, make a huge difference. This is especially true for specialist work like construction, engineering, or maintenance.

For example, a “Property Being Worked Upon” extension is not standard. But if you carry out service work on a customer’s property, it’s vital. Most policies start as a standard framework that can then adjusted by adding or removing cover depending on your risks. Getting this right is critical.

Myth 3 – It’s fine to be economical with the truth.

Some believe it’s best not to mention every detail when arranging insurance. In fact, this can cause serious problems later.

The Insurance Act 2015 stopped insurers from cancelling policies for innocent mistakes. However deliberate or reckless non-disclosure can still make your cover invalid. Underwriters tend to assume the worst when information is missing. For instance, if you have a staff canteen and don’t mention you don’t use deep-fat fryers, they may assume you do pricing accordingly.

Being open and clear helps your broker present your business in the best possible light. Sometimes, disclosing more information can even reduce your premium.

Myth 4 – Insurers never pay out.

In reality, most claims are paid, usually over 95% for most types of cover. When a claim is rejected, it’s almost always because of fraud, missing information, or unsuitable cover.

Insurance companies also operate on tight margins. Their Combined Operating Ratio often shows that for every £100 they collect, they may pay out £103 in claims and costs. This means insurers rely on investment income or future premium increases to make up the difference — not on avoiding valid claims.

Myth 5 – If I’m at fault, insurers won’t pay

The opposite is true. UK liability insurance is based on fault. In most cases, insurers only pay if you were negligent or at fault. If you did nothing wrong, there’s no liability, and no claim to pay.

Myth 6 – Using lots of brokers gets better results.

It sounds logical, but it usually works against you. When many brokers approach the same insurers, each has fewer options and less influence.

Most insurers operate on a “first come, first served” basis, meaning only one broker can get a live quote from them. A single broker managing the full process is able to compare more quotes. This enables them to negotiate stronger terms, and achieve better value.

Myth 7 – Bigger brokers always get better deals

Large brokers often focus on large clients. SME’s can find themselves dealing with automated systems or call centres rather than a dedicated account manager.

In contrast, smaller brokers can provide a more personal service and take the time to understand your business. Most insurers offer the same prices and terms to every broker assuming the information provided is consistent. In some cases, a smaller, specialist broker may even secure a better deal thanks to their expertise or relationships.

How to Get the Best Outcomes

• Understand your own risks. Know your business and the challenges you face. Some risks can be removed, reduced, or managed. Insurance should cover only what truly matters.
• Take advantage of the market. Right now, premiums are falling and cover is expanding. It’s a good time to review your policies and invest in risk management while rates are low.
• Watch your claims history. Insurers look at a five-year record. A single large claim may be easier to explain than many small ones. Timing your renewal strategically can make a difference.
• Choose the right broker. The best brokers don’t just sell insurance, they sell your business to insurers. They understand your risks and know how to present them effectively.
• Avoid peak renewal periods. Many firms renew in December, January, or April. Choosing a quieter time helps your broker and insurer focus on your renewal.
• Be open and honest. Your broker is on your side. Give them full information so they can secure the best cover and terms.
• Ask questions. There are no silly questions in insurance. The more you ask, the fewer surprises you’ll face later.