Jason Tassie, Founder, Know Your Business
Small business owners can sometimes spend hours negotiating a better deal on energy, broadband or office supplies, but when the business insurance renewal arrives its so easy just to accept the new premium and move on.
Insurance is one of the few business costs where paying more doesn’t necessarily mean getting more. In some cases, businesses are paying higher premiums for cover that no longer reflects how they actually operate.
I think too many SMEs have fallen into the habit of treating insurance as an admin chore and renew because it’s convenient, because they’ve always used the same provider, or because they assume shopping around will be complicated.
None of those are particularly good reasons to spend money.
Loyalty is not a financial strategy
There’s a dangerous assumption among business owners that staying with the same insurer is somehow cheaper. But the same business owner who challenges a £50 increase in their monthly software subscription might barely question several hundred pounds added to their annual insurance premium.
This problem is psychological. Insurance is something we buy hoping never to use. Unlike a software subscription or energy contract, there’s no obvious day-to-day benefit to measure.
That makes it remarkably easy to ignore.
Cyber risk has changed the equation
One of the clearest examples of changing business risk is cybercrime.
According to the UK Government’s Cyber Security Breaches Survey 2025/2026, 43% of businesses identified a cyber security breach or attack in the previous 12 months. Yet only 47% reported having some form of insurance against cyber risks.
Those figures should concern business owners.
Small businesses increasingly rely on cloud accounting, online payments, customer databases and digital communications. A serious incident can interrupt trading, create recovery costs and damage customer relationships.
And yet cyber insurance can still be an afterthought.
Know what you’re legally required to have
There’s also a difference between insurance that’s commercially sensible and insurance that’s legally compulsory.
For example, most UK employers must hold employers’ liability insurance with at least £5 million of cover, subject to exemptions. The government’s employers’ liability insurance guidance makes clear that businesses can face fines of £2,500 for every day they operate without the required protection.
Other types of insurance, including public liability and professional indemnity, may be required by contracts, professional bodies or regulators rather than universally by law.
The distinction matters.
Business owners should understand their business insurance requirements before deciding what cover to purchase or remove.
Cutting unnecessary costs is sensible. Accidentally removing protection that a business is legally or contractually obliged to maintain is anything but.
Make renewal a commercial decision
I would encourage every SME to treat insurance renewal like any other significant supplier negotiation.
Start reviewing cover four to six weeks before the renewal date. Identify what’s changed in the business, including turnover, staffing, equipment, premises and services.
Then obtain comparable quotations, checking that cover limits, excesses and exclusions are genuinely equivalent.
Where the business has more complicated risks, an experienced broker can be valuable. But business owners should understand which insurers a broker can access and how that broker is paid.
And don’t be afraid to challenge the existing provider.
A longstanding relationship may still offer excellent value, particularly where an insurer understands the business and has demonstrated good claims service.
But that value should be demonstrated rather than assumed.
Most importantly, material changes to the business may need to be disclosed during the policy year. Waiting until renewal could leave a company exposed.
Complacency is the real cost
Small businesses face enough financial pressure without voluntarily paying more than necessary for essential services.
Insurance is supposed to protect a business against uncertainty. It shouldn’t become an unquestioned annual expense simply because the owner is too busy to investigate alternatives.
I don’t believe business owners should automatically switch insurers every year. Chasing a slightly lower premium at the expense of reliable protection would be equally misguided.
But I do believe they should challenge every renewal, understand what they’re buying and be prepared to walk away when the value no longer stacks up.
