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Businesses cancelling insurance policies to reduce their costs

Businesses cancelling insurance policies to reduce their costs may be making false economies – and even leaving themselves exposed to legal trouble.

    Many businesses across the UK have felt the lingering impact of the COVID-19 pandemic, and cutting financial corners seems to be the chosen method to keep things afloat. But does cancelling your insurance cause more damage than it’s worth? 

    Coverage for Past Work 

    Cancelling insurance means you will lose your coverage for any previous work. Errors and omissions insurance is typically a claims-made policy, which will not cover claims filed after the policy has been cancelled, even if the incident took place while the policy was in effect. This could land you and your business in some legal trouble and unless you pay for additional coverage when you start up a new policy, you could be susceptible to lawsuits related to past incidents before the new policy started. 

    Cancelling and Restarting 

    It’s not uncommon to cancel insurance while things are tight with the intention of picking it back up later. Unfortunately, cancelling will hike up your premiums with additional charges and fees when you start back up again, and you cannot guarantee your business’ financial security during the period free of coverage. 

    Types of business insurance 

    There are many different types of business insurance available, and the right cover depends on your business. Whether you own a business in customer care or a marketing service, you’ll require a tailored package with necessary cover to protect your business suffering any catastrophic losses. A professional insurance agent will be able to find the right package for your business and adjust it to any additional needs. 

    Professional Indemnity and Public Liability Insurance Protect Your Business 

    No matter your commitment to customer care in your workplace, things don’t always go to plan and mistakes which involve other people often come at a cost to your business. For businesses that provide advice and service to customers and deal with intellectual property and confidential data, insurance is a must. Bad advice, faulty service and negligence can cost money and lead to legal trouble. PI and PL insurance will cover your legal defence fees and compensation payments, which can be hugely detrimental pay-outs if your business isn’t covered. 

    Why Employers’ Liability Insurance is Important 

    Most employers are required by law to insure against liability for injury or disease to their staff resulting from their employment. Employers’ liability insurance covers your business in the instance of an employee making a claim against you and your workplace. You can be fined as much as £2,500 every day your business isn’t covered by an employers’ liability insurance policy which complies with the law. 

    Adjusting Your Coverage 

    Adjusting a businesses coverage by consulting with your insurance agent is a much more feasible option than cancelling all together. You may be able to lower your premiums, or your business might qualify for less coverage if your overall package is slipping outside of your budget. 

    Cancelling business insurance only results in further losses, contact an agent for advice today. 

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