Comparing business insurance policies

Why the cheapest quote is not always the best deal

When you receive several insurance quotes, it is tempting to pick the cheapest. But a policy that does not pay out when you claim is money wasted. The cheapest premium often means narrower cover, higher excess amounts, or exclusions that relate directly to your business activities.

Taking an hour to compare the detail across two or three quotes can save you thousands if something goes wrong. This guide shows you what to look for.

What to compare beyond price

For every quote you receive, check these seven areas before making a decision.

Insurance policy key terms explained

Plain English definitions of essential terms found in UK commercial insurance policies, including excess, indemnity limits, claims-made and occurrence bases, and disclosure duties under the Insurance Act 2015.

Excess (deductible): The amount you pay towards each claim before the insurer pays. Compulsory excess is set by the insurer; voluntary excess is an additional amount you choose. A higher voluntary excess reduces your premium but increases your out-of-pocket cost per claim.
Indemnity limit: The maximum the insurer will pay. Can be "per claim" (each individual claim up to the limit) or "aggregate" (total for all claims in the policy year). Aggregate limits are cheaper but riskier if you have multiple claims in the same year.
Claims-made basis: Policy covers claims made during the policy period, regardless of when the work was done. Used for professional indemnity, directors' and officers', and cyber insurance. You must maintain continuous cover with no gaps to avoid losing protection for past work.
Occurrence basis: Policy covers incidents that occur during the policy period, regardless of when the claim is made. Used for employers' liability, public liability, and property insurance. More expensive but provides broader long-term protection.
Retroactive date: The date from which past work is covered under a claims-made policy. If you switch insurer, ensure the new policy's retroactive date matches the previous one, otherwise work done before the new date will not be covered.
Subrogation: The insurer's right to recover their costs from a responsible third party after paying your claim. You must cooperate with recovery action and must not settle with the third party without your insurer's consent.
Material fact: Information that would influence a prudent insurer's decision to provide cover or set terms. Under the Insurance Act 2015 duty of fair presentation, you must disclose all material facts when taking out or renewing a policy. Failure to disclose can reduce or void your cover.
Schedule: The personalised section of your policy document showing your business details, cover levels, excess amounts, and any endorsements. Always check the schedule matches what you agreed with your broker or insurer.
Endorsement: An amendment to the standard policy terms. Extensions add cover beyond the standard wording; exclusions remove cover for specific risks. Endorsements override the main policy wording where they apply.
Condition precedent: A policy condition you must comply with for a claim to be valid. Common examples include maintaining working fire and intruder alarms, following specified security procedures, and notifying your insurer within the timeframe stated in the policy.

How to read a policy schedule

The policy schedule is the personalised front section of your insurance document. It contains the specific details of your cover. Before you accept a policy or sign a renewal, check every item on the schedule:

Business details — verify your trading name, address, business description, and number of employees are correct. Errors here can give the insurer grounds to refuse a claim.
Cover types and limits — confirm each section matches what you requested. If you asked for £2 million public liability but the schedule shows £1 million, raise it before accepting.
Excess amounts — note the compulsory and voluntary excess for each section of cover. These may differ between sections (for example, a higher excess on business interruption than on contents).
Endorsements — these are modifications to the standard policy terms. Extensions add cover; exclusion endorsements remove cover for specific risks. Endorsements override the main policy wording, so read them carefully.
Retroactive date — for claims-made policies (especially professional indemnity), check this date matches the start of your previous policy. If it does not, work completed before this date will not be covered.
Conditions precedent — requirements you must comply with for claims to be valid, such as maintaining working alarms or following specified security procedures.

Build a comparison table

A simple table makes differences between quotes visible at a glance. Set up a spreadsheet or table with these rows:

Insurer name
Annual premium
Indemnity limit (per claim or aggregate)
Compulsory excess
Voluntary excess
Key exclusions (list any that relate to your activities)
Policy basis (claims-made or occurrence)
Retroactive date (if claims-made)
Insurer financial rating
Claims service notes

Fill in one column per quote. The differences will become obvious, and you can make an informed decision rather than choosing on price alone.

Your disclosure duties when buying or renewing

Under the Insurance Act 2015, you have a legal duty to make a fair presentation of the risk when you take out or renew a commercial insurance policy. This means you must disclose every material fact that would influence an insurer's decision — including claims history, changes to your business activities, new premises, or regulatory actions.

If you fail to disclose a material fact, the insurer's remedies are now proportionate to the breach. An innocent mistake will not automatically void your entire policy, but a deliberate or reckless non-disclosure can still result in the insurer avoiding the contract entirely.

Duty of fair presentation (Insurance Act 2015)

Legal duty for all UK businesses to make fair disclosure when purchasing or renewing commercial insurance.

The Insurance Act 2015 replaced the old duty of disclosure with a new duty of fair presentation. All UK businesses buying commercial insurance must comply with this duty when placing, renewing, or varying policies.

What you must do:

Disclose every material circumstance you know or ought to know, OR
Give sufficient information to put a prudent insurer on notice to make further enquiries

How to present information:

Information must be presented in a manner reasonably clear and accessible
No "data dumping" - cannot bury important facts in excessive documentation
Factual representations must be substantially correct
Statements about expectations or beliefs must be made in good faith

What you "ought to know":

You are presumed to know what would reasonably be revealed by a reasonable search of information available to you, including information known to:

Senior management
Those responsible for buying insurance
Your insurance broker or agent

In force from: 12 August 2016
Applies to: All non-consumer (business) insurance contracts
Does NOT apply to: Consumer insurance (separate Consumer Insurance Act 2012)
Can be contracted out: Limited - Section 9 (representations) cannot be contracted out
Material circumstance: Information that would influence judgment of prudent insurer
Reasonable search standard: What a person in insured's position would have searched

Business Insurance Cost Factors

Factors that affect business insurance premiums

Business sector: High-risk sectors (construction, healthcare) pay more than low-risk (office consultancy)
Number of employees: More employees = higher Employers' Liability premiums
Annual turnover: Higher turnover usually means higher premiums (greater exposure to claims)
Claims history: Previous claims significantly increase premiums; no-claims history reduces cost
Business activities: Working at height, heavy machinery, or hazardous materials increases cost
Security measures: Good security (alarms, CCTV) and H&S practices can reduce premiums

What to do next

Gather at least three quotes using different routes — direct from an insurer, through a broker, and via a trade association scheme if available.
Use the comparison table approach above to evaluate each quote on its merits, not just price.
Read the full policy wording (not just the summary) before you commit.
Verify the insurer is FCA-authorised using the Financial Services Register.
If you use a broker, consider asking them to explain the key differences between quotes rather than simply recommending the cheapest.
Set a calendar reminder for 10 weeks before your renewal date to start comparing again next year.

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Comparing business insurance policies

Why the cheapest quote is not always the best deal

What to compare beyond price

How to read a policy schedule

Build a comparison table

Your disclosure duties when buying or renewing

What to do next

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🧪 Business Context Testing

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Why the cheapest quote is not always the best deal

What to compare beyond price

How to read a policy schedule

Build a comparison table

Your disclosure duties when buying or renewing

What to do next

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Business Context Testing

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