7 ways to reduce the cost of your business insurance

Lowering the amount you pay in insurance premiums will benefit your business overall.

Business insurance premiums can be a significant expense for a small business. If you can find ways to keep those expenses down, it will lower the amount of cash flowing out of your company.

Striving to reduce your premiums can also have the added benefit of identifying possible ways in which you can make your business more efficient.

Here are seven possible ways to reduce the cost of your business insurance. (But beware of being underinsured!)

1. Demonstrate that the business is well run

Insurers charge lower premiums for businesses that are well run. It's important that you can show evidence of this through:

  • your own risk assessments
  • your quality control procedures
  • financial accounts that are filed on time
  • audits
  • your and your employees' professional accreditations and qualifications, training and ongoing development

2. Consider using an insurance broker

Insurance can be a tricky product to buy without advice. A broker can help you navigate the process and select insurance cover that's tailored to your specific needs. The broker works on your behalf and should search the market to find the right insurer for you.

You can find a broker on the website of the British Insurance Brokers Association (BIBA).

3. Compare rates each year

It's not a good idea to renew your insurance automatically. Whether you run an established business or are just starting out, each year you can benefit from comparing the rates that different insurance companies offer.

Be sure to look at similar or identical coverage to get a realistic idea of how much you can save by choosing one provider over another, and contact the provider for clarification on any terms or restrictions you don't understand.

4. Make safety a priority

Avoid potential hikes to rates for workers' compensation insurance by training and educating your employees regarding proper safety practices in the workplace. You can put together your own training or bring in a third party to conduct a programme or seminar.

Research new procedures and technologies as they become available and make a plan to implement those that offer the greatest benefits to your business. Be consistent with training and review your safety policies often so you can make adjustments and updates as needed.

5. Consider a comprehensive package

Talk with your insurance company about the possibility of combining all essential business coverage into one package to save on premiums, or look at the bundles other companies offer to discover if you'd be better off switching providers.

6. Review employee classifications

Workers' compensation class codes tell insurance companies the type of work each employee in your business performs. Using the wrong classifications, and erroneously listing employees as being in high-risk jobs, could mean you pay higher insurance premiums.

Reviewing employee classifications when you review your insurance policies can alert you to potentially expensive mistakes that you need to correct.

Deliberately misclassifying workers in an attempt to save money is unethical, leaves employees without essential coverage, and can lead to you incurring serious financial penalties.

7. Use trade or professional organisations

Some trade or professional organisations offer insurance coverage to members through an affiliation with an insurance company. This coverage may be cheaper than insurance you purchase on your own. Even if the organisation doesn't offer insurance, its members may share tips on how to obtain appropriate insurance at a good price.


While you must make sure you're not overpaying for insurance, you should guard against underinsuring yourself as it can significantly affect any claims you make if your business suffers a loss.

Reducing your premiums and exposing your business to future losses is a false economy. Examples of underinsuring include understating the actual amount of stock you hold on the premises, or the amount your business generates in turnover.

Reference to any organisation, business and event on this page does not constitute an endorsement or recommendation from the British Business Bank or the UK Government. Whilst we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.

Making business finance work for you

Our Making business finance work for you guide is designed to help you make an informed choice about accessing the right type of finance for you and your business.

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