As a business owner, you’re feeling the crunch when it comes to the current economic crisis. Every cost is on the up, every bill is a little bit bigger than it used to be, and every expense is racking up to be quite pricey. Recent figures worryingly show the truth behind the current cost crisis as news reports note how inflation is due to hit over 18 per cent by early next year. The future for businesses may at times feel troubling and difficult to deal with. One expense increase that you will have noticed is that of insurance premiums. Why are these affected so much? And is there anything you can do about it?
Why Should You Get Building Insurance in the First Place?
The truth is that building insurance is a non-negotiable expense – you really can’t manage without it. Buildings insurance protects your commercial property and business in the event of any damage done to your property in the event of different factors including floods, fires, storms or burst pipes. If you didn’t have buildings insurance to fall back on, if any of these things were to occur, you would have to pay out for the repairs and maintenance out of your own pocket. That’s a portion of your already stretched budget on expenses that an insurance provider could’ve covered. Furthermore, you need to think about the downtime of your business if you were to close for repairs which would take longer if you were to fund them yourself.
Why Are Building Insurance Premiums Going Up?
There are some big global factors influencing building insurance premiums. As mentioned, inflation is up and putting pressure on the market. The overall costs of materials and labour are also increasing, so repairs end up being more expensive. Even climate change is affecting your insurance bill, as unpredictable weather patterns and severe events are rising in frequency and causing damage to property in an unprecedented way. There are lots of advancements in construction methods and materials causing houses to be now more flammable than before. Furthermore, Covid-19 is still wreaking havoc on the market as claims shot up over the pandemic and insurance providers have been left with no choice but to put their prices up to compensate. Deacon, a specialist in building insurance, estimates that a property that would have cost £500,000 to rebuild in 2020 but cost £544,000 for the same the following year. Clearly, these price hikes are no joke.
So, now you know how important building insurance is, and why the price is going up, what can you do to make it more affordable for you and your business?
Reducing Your Business Building Insurance Premium
While the world events fanning the flames of inflation may be uncontrollable, you can however control the impact they have on your business by taking a few small steps and several minor precautions. When you do so, you’ll notice a significant difference in the cost of your building insurance premium. Make sure to carry out regularly re-evaluations of your property to ensure that it is insured for the right amount according to the Buildings Declared Value on your original policy document. When a building is underinsured, it causes significant problems in the future. The gap between the original BDV and the actual value of your property will just wider and wider. Remember that the cost of your premium is closely linked to the number of claims you make. By being proactive and attentive to potential issues, you can prevent claims from needing to be made in the first place.
It’s not all bad news when it comes to insurance premiums – if you keep your cool and don’t lose your head, you and your business will come out the other side of this recession even stronger than you went into it.
