General
Are You Falling for These 7 Common Insurance Myths?
Verlingue led our seminar in October for The Business Network Birmingham
In the bustling heart of the Midlands, our businesses are innovative, resilient, and constantly evolving. Yet, when it comes to business insurance, many of us still rely on outdated assumptions that could be costing us time, money, and crucially, peace of mind.
At a recent session for The Business Network Birmingham, we tackled head-on some of the most pervasive myths in commercial insurance. It’s time to set the record straight and empower Midlands business leaders to make smarter decisions about protecting their assets.
Let’s bust some myths! Read more on the extended blog here
Myth 1: Going out to market every year gets the cheapest prices.
The Reality: You’d think constant re-tendering would drive prices down, wouldn’t you? In truth, underwriters are busy. If they see the same risk year after year and never win the business, they’re less likely to put in their best effort. They prioritise fresh opportunities and reward loyalty. Repeatedly “shopping around” can put your risk profile at the bottom of the pile.
The Fix: Think strategically. A good broker knows when to test the market and when to nurture relationships.
Myth 2: All policies are much the same.
The Reality: This is perhaps the most dangerous myth. There are massive variations in the level of cover, particularly in those crucial small print details, extensions, and exclusions. For specialist work – imagine “Property Being Worked Upon” for a service business – these specific extensions rarely come as standard. Assuming uniformity can leave you catastrophically exposed.
The Fix: Never assume. Work with a broker who meticulously understands your operations and challenges your assumptions about what your policy actually covers.
Myth 3: Being economical with the truth, leaving out small details, is best.
The Reality: While the Insurance Act 2015 protects against innocent non-disclosure, deliberate or reckless omission can still void your policy. More often, it leads to underwriters assuming the worst. If you don’t mention your staff canteen has robust fire suppression and daily hood cleaning, they’ll assume deep-fat frying and no maintenance – and price you accordingly.
The Fix: Be transparent. A good broker can present your full risk profile, including robust controls, in a way that often secures better terms, not worse.
Myth 4: Insurers never pay out.
The Reality: The data simply doesn’t support this. For most types of cover, most insurers pay out over 95% of claims. Non-payments are almost always due to fraud, unadvised details, or a policy missing crucial cover. Insurers often operate on very tight Combined Operating Ratios (sometimes over 100%), meaning they pay out more in claims and costs than they take in premiums, making up the difference with investment income. They do pay.
The Fix: Work with a diligent broker to ensure your policy accurately reflects your risks and that all relevant details are disclosed from the outset.
Myth 5: If I’m at fault for damage to someone else’s property or an injury, insurers won’t pay.
The Reality: In fact, the opposite is true for UK Liability Insurance. It is fundamentally based on establishing liability (i.e., fault or negligence). If you are found to be at fault or negligent, that’s precisely when your liability insurance steps in to defend you and pay valid claims. No fault, no liability, no claim.
The Fix: Understand your own business’s specific areas of potential liability and ensure your broker has tailored your cover appropriately.
Myth 6: Multiple brokers will all compete with each other.
The Reality: While it seems intuitive, this strategy often backfires. Many insurers operate on a “first come, first served” or “one quote” basis. If two or more brokers approach the same insurer for your business, it means each broker has fewer options and less leverage. The result? You’re less likely to get the best overall deal.
The Fix: Choose one trusted, professional broker who will take the time to deeply understand your business and then strategically approach the market on your behalf, leveraging their full range of options.
Myth 7: The bigger the broker, the more buying power they have, and the better result.
The Reality: For many SMEs and mid-corporate businesses, this simply isn’t the case. Bigger brokers often prioritise larger, higher-fee clients. You might find yourself without a dedicated contact, doing everything remotely. Smaller, specialised brokers can offer face-to-face service and often achieve the same—or even better—terms, especially if they have niche expertise or strong relationships with particular underwriters.
The Fix: Prioritise expertise, relationship, and personalised service over raw size. A broker who understands your specific sector and fosters strong underwriter relationships can be far more valuable.
How to Get the Best Outcomes for Your Business Insurance:
So, with these myths busted, how can Midlands business leaders truly optimise their insurance?
- Understand Your Own Risk: Know your business, your sector, and your specific risks inside out. This empowers you to decide whether to remove, avoid, manage, or transfer risk.
- Make Hay When the Sun Shines: We’re currently in a ‘soft’ market (premiums falling, cover expanding). This is the time to negotiate for longer-term fixed premiums and invest in risk management. Insurers are even offering ‘risk management bursaries’ in some cases – money to help you reduce your risk, which pays dividends in future premiums.
- Claims Drive Premium: Insurers look at a 5-year claims picture. A good broker can strategically time market visits or explain away isolated large claims, differentiating you from businesses with numerous small, similar claims.
- Partner with the Right Broker: Your broker should be selling you to the insurer, not just insurance to you. Choose someone who genuinely understands your business and presents it as a brilliant bet for underwriters.
- Time Your Renewal Strategically: Avoid peak renewal months like December/January or April when the market is saturated and attention is limited.
- Full Disclosure is Key (Even to Your Broker): Your broker is on your side. Tell them everything, even the uncomfortable details. They cannot do their best job if they’re missing crucial information.
- ASK, ASK, ASK: Challenge your broker constantly. Ask ‘what if’ questions. This reduces the chance of mistakes and ensures you truly understand your cover.
By moving beyond these common myths and adopting a more proactive, informed approach, Midlands businesses can achieve far better insurance outcomes, securing not just optimal cover and price, but genuine peace of mind.
Want to gain more insights like this?
The Business Network Birmingham provides a unique platform for Midlands business leaders to share knowledge, challenge assumptions, and build lasting connections.
Our next event is on Thursday, November 6th at the Edgbaston Priory Club. Join us for our optional pre-lunch seminar on the critical topic of Intellectual Property (IP), followed by high-calibre networking over lunch. We invite CEOs, MDs, Senior Partners, and Directors to experience the value we offer.
Learn more and reserve your guest place here: https://www.business-network-birmingham.co.uk/events-seminars/