If you have a business insurance renewal that is due, and you are doing the sensible thing and looking around for alternative quotes, you may find there are a few different options available to you.

If you are paying over a few thousand pounds a year, it may be that an alternative broker cannot get a reduced price on your existing insurers renewal. Or, more importantly they cannot get you better cover.

However, the broker may offer you a better price option, by continuing to keep the policy going with your existing commercial insurance company, but with you changing the broker you deal with.

Most brokers earn a commission from the premium you pay. For example, if you premium is £3,000 plus 5% insurance premium tax, the broker will earn around 20% of the £3,000. As with all types of financial service, getting new customers is five times more expensive than keeping an existing one. So, the new broker can afford to reduce their commission a bit, to get you as a new customer.

In these situations, they will ask you to complete a “transfer mandate”. This is a letter, which you must complete on your own letterhead, prior to the expiry of your existing policy. It effectively says that you are happy for Broker B to deal with your insurances, compared to Broker A who used to do this.

You do need to check that you get exactly the same terms and conditions and importantly payment method. There is no point in moving from one broker that allows interest free instalments to another one that charges 5%. It can be a good way to save yourself 5 or 10% of your annual insurance costs.

When you are looking for a business insurance quote, you will be asked a number of questions and for information relating to your business. These include financial details, location, type of business and security.

In addition, you will always, without fail, be asked about your claims and/or loss history over the past three or five years. Some insurers will also need to know if you have ever had a claim in excess of £10,000.

The whole point about buying your business or commercial insurance, is that you want to receive a payment in the event of a loss. Of course, the insurers do not want to pay out on claims, but they do (believe it or not) accept that this why they exist.

Before you sit down and make your calls, it is worthwhile considering exactly what is normal as far as claims are concerned. It of course depends on a number of factors, but one claim, every 3 to 5 years is entirely acceptable. Two is unlikely and insurers may start to apply more onerous terms. More than two, and you find insurers will start to stop quoting or only quote if they apply an increased excess.

If you have an adverse, more than three claims in 5 years, history you may find it more difficult to get quotes.

In 2010 people can, quote rightly, demand that and type of contract they enter into is in plain English and easy to understand. Business insurance, is thought by many to be a staid, almost boring industry. But, when you consider the lengths that the industry has gone to in cleaning up it’s act on “small print” that neither man nor beast could understand, then it can be considered quite progressive.

I can remember insurance contracts, even as close as the early to mid nineties, being very complex, unwieldy and difficult to understand, and this is coming from people that were actually paid to work in the industry! A sea change occurred with the plain English campaign and it became almost a race to make sure that policy wordings were reviewed and assessed with a more modern eye.

The key point was that the wordings could not be “dumbed down”. If there was a potential legal action based on the policy wording terminology, then it still had to be able to stand up to the scrutiny of the legal profession.

It may seem simple to read through a lengthy contract and put this into terms that are much easier to understand, but it really is a skill to do this without:-

a) making the wording excessively long when compared to the original and

b) so that the essence of what the policy was trying to say and do, was not lost.

I am currently tasked with re-negotiating our business premises lease as we are moving, in the same building, from the first, to the second floor. The most confusing thing I have come across is the “heads of terms” regarding the lease. Even in the current climate, we are still faced with legal documents that contain no punctuation (which is deliberate) and extremely old fashioned terminology. Whilst I had hoped we would not have to, I am going to have to appoint solicitors to review this formally which will no doubt cost 3 or even 4 figures, when the document is only a page and a half long.

Compared to this, your standaed commercial insurance policy wording is a breath of fresh air and long may it continue.