Apr 7, 2011

Comparing Business Insurance: What you really need to think about

Going back ten or fifteen years, if you wanted to buy yourself a new consumer electric item, say a television, this would involve some time and effort.

First of all, there was not quite as much choice as there is nowadays, you had to then decide on which model to buy and it's relative merits compared to others. Secondly, when you wanted to go and compare the prices the only way was to physically visit the shops, phone them up or refer to a catalogue, if one was available.



Nowadays though, things are much easier. Not only can you sit in the comfort of your own home and browse the different retailers, you also have the added benefit of web sites that will do this for you. If you want an Acme A345 flat screen TV, it will only take a few minutes to find out which of the retailers offers the best price.

Now, when you are buying a physical branded product, this is easy because whoever is selling it to you does not really matter, the product you receive will be exactly the same. This is because it is a branded product that you have chosen to search for.

Comparison sites apply not only to physical products, but to financial services as well - one of these being your commercial business insurance. There are a growing number of websites that, offer, to compare business insurance for you. But, what exactly do they compare?

As we said, with a physical product, it really does come down to price in the main, because you know what you are getting. Other aspects include availability, delivery costs, is it in stock and do you get a warranty. But, the main selling point is price.

When we talk insurance though, just because someone is offering you a cheaper product, how do you know if it is offering similar, better or worse cover than you currently have?

This is where, as a business insurance broker, we take issue with these sites. We may offer someone a perfectly acceptable renewal premium of £800 and they come back to us saying that they have got a price of £735 from ABC website.

We usually ask them to email it us and lo and behold, when we get the quote the excesses are higher, the installments cost more and there are other onerous terms, conditions and warranties. We then have to re-sell our existing policy to the customer and explain to them that the different between a £100 and £500 excess is massive for their business, if they have a claim. Just think back to the winter we have had, business was extremely tight for months and months and then we had the most burst pipes claims in a month in January than we have had in the past ten years. Just imagine how much of a dent in your profits an extra £400 excess would have made?

What we are saying is, whilst you can easily compare product A with product B, it is not so easy with policy C and policy D. This is where you need to speak to a broker. We are not trying to make out that insurance is akin to rocket science. What we are saying is that when you are comparing an 80 page policy document with another of similar size, then you need to be careful to read through all of the print, small or large. This is where a broker can help because they can easily compare the different products for you and comment on the relative merits of each of the offers.

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