Are you running your own business? In Australia, roughly one-third of all small businesses are headed up by women—a figure that’s increased by 24% from 2006 to 2021.
But with inflation and the cost of living climbing, it’s no wonder that one of the top five challenges facing businesses in 2024 includes controlling costs. Unsurprisingly, female business owners are looking for ways to keep expenses down, particularly when comparing small business insurance prices.
With these budget constraints in mind, it’s no wonder you’re asking yourself, “Why should I pay more for coverage I may never use?” or “Can I find similar coverage for less elsewhere?”. However, when conducting a business insurance comparison, assessing policies based on premium costs alone isn’t the best way to find the right coverage for your business.
We sat down with Lisa Feng, Head of Broking at Stella Brokers, to discuss why cheaper isn’t always better when it comes to business insurance.
The hidden costs of ‘cheap’ business insurance policies
Business insurance is designed to protect companies from risks like property damage, liability claims, and business interruptions, offering financial security and operational continuity.
When comparing policies, many business owners focus on business insurance costs, like monthly premiums. However, prioritising short-term savings can prevent business owners (like you) from securing an adequate level of coverage to truly protect your business.
“One client I’ve worked with previously secured a low-cost policy that seemed adequate at first. But when a significant storm caused water damage to their property, they discovered that their cheap policy excluded coverage for flood damage. The resulting repairs cost them thousands, far exceeding the savings they thought they had gained. This situation highlights how essential it is to thoroughly understand the terms of a policy before making a decision.”
Lisa Feng, Head of Broking at Stella Brokers.
There is a range of potential drawbacks to selecting the most affordable business insurance policy option, including:
- Limited coverage: Securing a cheaper insurance policy may mean you’re not insured for the right industry or occupation, and limits could apply to your policy. When it comes time to claim, you may not be fully protected, and your business could be vulnerable to risks that are crucial to your operations.
- Higher deductibles: Cheaper premiums may mean you’ll pay higher out-of-pocket costs before your insurance policy starts covering a claim. As a business, this could mean significant expenses and an unwanted hit to your cash flow if an unexpected event occurs.
- Higher chance of exclusions: Generally speaking, policies that come at a lower cost may have more exclusions. It’s important to review these exclusions carefully to ensure you’re not left unprotected when you need coverage the most.
- Higher long-term costs: While cheaper premiums might sound attractive, you could be left forking out higher costs in the long run if your business insurance policy doesn’t offer adequate coverage.
- Poor claims experience: In some cases, providers with lower rates might not have the best reputation for handling claims. But by opting for a policy from a provider with a proven track record for fair, timely claims processing, you can put your business in the best position to have a policy you can rely on.
What to look for when comparing insurance policies
While managing operating costs is an important part of running a successful business, having the right insurance policy in your corner can offer priceless peace of mind, knowing your business is safeguarded against a range of risks. This allows you to focus on running and scaling your organisation without worrying about potential gaps in coverage.
So, if insurance premiums aren’t a reliable way of comparing insurance policies, what features should you focus on instead?
As a business owner, it’s important to weigh up your business insurance options by reviewing these key policy features, including:
- Coverage limits: Also known as a policy limit, this is the maximum amount an insurance provider will pay in the event that you make a valid claim on your business insurance policy. Some insurers will have specific limits for individual claims, while others may impose limits on all claims made within a specific period, such as a single policy year.
- Exclusions: All insurance policies will have exclusions, which are particular scenarios, events or circumstances when you may not be covered or able to make a claim. It’s important to check what exclusions apply to the policies you’re comparing and ensure these exclusions won’t expose your business to unwanted risks or disruptions.
- Insurer’s reputation: The best insurers will be recognised and acclaimed for their claims handling and customer service experiences, with plenty of positive customer reviews and industry awards to show for it.
- Additional services: From risk management support to flexibility in coverage options, it’s important to look for providers that go above and beyond to find the right insurance policy to suit your business.
How Stella Brokers can help
It’s no secret that selecting the right business insurance policy for your business can be fraught with complexity. That’s why we’re on a mission to champion equality and design products and experiences for a fairer world—particularly for female founders.
At Stella Brokers, we take a personalised approach to business insurance by assessing each client’s unique business risks and needs. We educate clients (like you) on the importance of comprehensive coverage and guide you through various policy options.
Our goal is to ensure you understand what each policy entails, enabling you to make informed decisions that provide both protection and value rather than just focusing on the price tag.
Ready to get started? Get in touch with our team at Stella Brokers for an obligation-free initial consult.
