Business insurance costs for a new start-up

2010 saw the first positive economic growth in the UK for nearly two year. 2008 and 2009 will go down in history as two of the most difficult trading years for nearly every type of business, if they managed to survive. Although we have seen positive growth during 2010, we are still not out of the woods yet and the recover is best described as fragile.

The United Kingdom has always had an entrepreneurial spirit and thankfully the last few years, whilst they have of course suppressed start ups, have not stopped them completely. Look at the London Gazette and you will see that there are still hundreds and hundreds of new limited companies being formed. In addition to these more formal business structures, there are people setting up as individuals and partnerships who have no need to register as a limited company.

If you are one of those people who have decided that they will start their own business, you will do this either with your own money, or borrowed money. Whether you are doing this with or without borrowed money, you will need to work on a business plan. This many well be a formal business plan as there are numerous software offerings for the major UK banks, or it could just be your scribbles on a piece of A4 paper about how much turnover you will expect and what your costs are likely to be.

It is always worth getting a correct estimate of costs, rather than sticking a finger in the air and guessing what a particular cost will be. One of the outgoings you will have to take account of is for your business insurance. Whilst not every new venture has a legal requirement to arrange insurance cover, it is of course sensible and prudent to do so.

Until the business is actually trading it will be difficult for you to get a formal quote. What you can do though, is to get an indicative premium. A business insurance broker will usually be prepared to take down as many details as they can about your business and to give you an annual premium for the cover, as it stands at that moment in time.

The reason for this is that things can change, you may be planning to start your shop or restaurant in November, so getting a quote in August can only be an indication. Nearly all commercial insurance companies only provide quotes that are valid for 30 days. Prices change, disasters happen and insurers cannot guarantee that the price they quote today will still be valid in 6 months time, as you would expect.

You need to get as much information as you can about the business, including a trading address and postcode. Even if it is just an industrial unit that you have set your eye on, you can still use this for a premium indication. Just make sure to tell the broker that no correspondence is to be sent to that risk address.

This way, if you are starting a business in the next 3 or 4 months, your indication of premium is usually going to be within 10 or 15% of the actual real cost. Therefore, you can put this amount into your business plan as an outgoing and move on to the rest of the plan.