Small business insurance claims: food for thought

Today we’re delighted to provide the latest of PolicyBee’s down-to-earth sponsored posts demystifying the insurance business.

They understand that many small business owners have a somewhat jaded view of insurers and the claim process.

You might be quite surprised by these facts and figures about small business insurance claims and the payouts made this year:

Busting the myths
Some small-business owners are a bit hesitant about buying professional insurance. Understandable, really: it feels like you’re not actually getting anything. Insurance is just an abstract concept that you have to trust.

Most insurers don’t even send out paper documents any more. That’s one expensive email attachment.

So, considering most people won’t ever have to use their business insurance, is it worth the time and money? Will it actually help? Will you get what you’ve paid for?

If these are questions you find yourself asking, the following figures might surprise you.

Magic numbers
Already this year, our insurers have paid out £289,405 settling small business insurance claims.

The largest was an engineer’s professional indemnity insurance – an impressive £90,000. In fairness, most small business claims are a lot less.

Since January, we’ve had 127 notifications from customers with a potential claim. That’s a few each week. Not as rare as you thought?

Of these 127, 59 were ‘notified only’. This means the situation didn’t develop into a claim, although it had the potential to. All of these fell under the professional indemnity insurance umbrella.

Despite the commonly held belief that insurers do their best to avoid opening their wallets, we’ve found, actually, that’s not the case.

Of the 127 potential claims, 57 developed into a full-blown disaster, and our insurers paid up.

Here’s why
That’s because buying insurance is a bit like entering into a contract. If you pay your premium and stick to the terms of the policy, your insurer has an obligation to pay out if you have a claim (providing it’s actually covered, of course).

Our insurers have turned down 11 small business insurance claims so far this year. In most cases, it’s simply because the customer’s insurance didn’t cover what they were claiming for. For example, a camera damaged in Barbados when the policy was limited to EU cover only.

On a handful of occasions, the insurer refused a claim because the customer misled them about their business activities or the value of their property. In these situations, the insurer has no obligation to pay your claim. It pays to be honest, clearly.

Portable hazards
Here’s a good stat for you.

Of the 127 potential claims, a whopping 56 were from photographers and videographers. Although there were a few professional indemnity claims, the majority were for lost, stolen, or damaged equipment.

In fact, we see more portable equipment claims than for any other type of insurance. Gadgets are great for taking your office with you but the facts speak for themselves. It’s clearly much easier to lose or damage things when they’re not kept safely at home.

Not surprisingly, if you rely on portable kit to do your job, our advice is to get it covered. A few quid a month could be money well spent.

An intelligent investment
Obviously, we’re not here to preach or scaremonger. We like to deal with facts and absolutes. And if we felt there was no need to tell you this stuff, we wouldn’t.

But we do because we have the benefit of experience.

Not only do small business insurance claims happen regularly, but a very large chunk of them are paid by the insurer. Who’d have thought? Customers are getting what they pay for, which is as it should be, really.

PolicyBee is a specialist professional indemnity and business insurance broker born in CEO Iain’s shed because he was so frustrated at how confusing and difficult it was to get business insurance. PolicyBee is independent, digital, and understand the problems a young, modern business has because it is one. Although it’s no longer run from the shed.

Do you have any questions about insuring your business? Let us know in the comments and PolicyBee will answer them in future posts.

PolicyBee are very good at taking the jargon out of insurance. In previous posts they have written a Complete Guide to Insurance for Home Workers, played devil’s advocate on the subject of professional indemnity insurance, and explained how to make sure all your home office equipment is fully insured and you don’t fall foul of the ‘average rule’.