Essex Insurance Brokers – Ever paid extra premium for having a good year?
It doesn’t seem right does it? But there are still policies around today that charge you an additional insurance premium at the end of the year, if your turnover (and wage bill) are higher than what you said they would be.
In my experience, its been the construction and heavy liability trades that have suffered most from these sorts of policies, but any business should take note here.
The insurer’s main justification behind charging you more is that your turnover and wage bill help them gauge their exposure and set the price of your policy. Therefore, if these figures go up, they say you should pay the difference.
Now, when submitting your financial data to your insurance broker or insurer, you must not deliberately underestimate or under-declare, as dishonesty will render any cover you have void.
Don’t get trapped!
Probably one of the worst things about these sorts of policies is that if you do have a good year and are hit with a chunky additional premium, your insurance company will usually waive the whole thing – just as long as you renew with them!! Because of this, you can never get away; even if there are far better deals out there!
Don’t pay something for nothing!
Recently I’ve seen an insurance broker’s Terms of Business agreement that says they can charge you 25% of end-of-year additional premium for getting it waived; when the insurer usually waives it without any negotiation required, to get you to renew!
There are however policies out there that don’t operate in this way, with which you wouldn’t be charged more premium at the end of the year if you had a good year financially. However, you need to discuss your needs and circumstances with a commercial insurance broker who has a lot of experience in this area.
It’s always worth checking before taking out a policy whether you will be charged at the end of the year if your financials are higher than you thought they would be, and the broker’s terms of business agreement.
In any event, a decent insurance broker will be in regular contact with you, to keep up to date with how things are going and to generally look out for your interests by tackling these issues.