On this page
- Why does my premium rise when nothing in my business has changed?
- Does one claim change what I pay?
- What should I tell the insurer so the premium is right?
- Is a higher excess worth it when the premium climbs?
- If I take the cheaper quote, which jobs could lose cover?
- When should public liability come out of the package?
Key points
- Each insurer prices your trade based on past claims it has paid.
- Recent claims on your record mean fewer insurers are willing to quote.
- An insurer may ask for your financials when you claim. If you declared less than your real turnover and the insurer would never have offered the cover at the real figure, it can reduce or decline the claim. Declare your full turnover and update it when the business grows.
- Of all the things you can change, the excess makes the smallest difference to a liability premium.
Why does my premium rise when nothing in my business has changed?
Often your business stayed the same and your trade changed. Each insurer prices your trade from the claims it has paid in it, as well as how much of that trade it wants on its books, what it pays to insure itself and its monthly targets. When those claims change, it reprices the whole trade.
Take plumbing. Water claims in strata buildings have made the trade expensive to insure. Many insurers that sell business packs have pulled back from plumbers, especially those turning over more than about $1 million. A careful plumber with a clean record still pays for the trade's losses.
Two ordinary decisions can also push the premium up:
- Using subcontractors instead of employees. An injured employee is a workers compensation matter. An injured subcontractor can be a claim on your public liability, which moves the risk onto your policy.
- Importing. Goods you bring in from overseas increase the products liability risk on your policy, the part of the cover that answers for harm your goods cause.
What we check
Whether the insurer pricing you still wants your trade. We test the market at every renewal.
Does one claim change what I pay?
It can, though usually not as a simple loading, a surcharge added to your rate. A claims history that is not clean reduces the number of insurers willing to quote. The underwriting agencies with the sharper premiums, specialist firms that write cover for insurers, usually decline first, and with less competition, the remaining premiums usually rise. In what we have seen, most demands for $30,000 to $50,000 are genuine, and an insurer often finds one cheaper to settle than to fight.
One claim rarely closes the market.
Even if your insurer will not renew, others usually quote. They ask what you learned and what you changed in your business practices so it will not happen again. Good answers get terms, though those terms can cost more depending on your trade and the claim. Insurers commonly ask about claims in the last three to five years. The period varies, and an insurer reads one unlucky event very differently from a pattern.
Case
A locksmithing business, about $10 million turnover, $20 million limit
- 2018Premium$11,310
- 2020Premium$7,994
- 2021One claim paid, $16,982
- 2022Premium, after the claim$23,862
- 2024Renewal offered by the same insurer
$31,139 - 2024Placed with a mainstream Australian insurer$19,910
Sometimes you have to move away from the insurer that paid a claim, because it will not adjust its rates. We know this, and we check for it when we renew a policy.
What should I tell the insurer so the premium is right?
Your business as it runs today. Your trade, your claims history and your turnover move the premium most. Which of the three weighs most depends on the business. What you pay subcontractors comes next. A policy still rated on the turnover you declared two years ago is on the wrong figure if the business has grown.
Business pack insurers also cap the turnover and the values a pack will cover, so the figure you declare matters at claim time too.
If your work mixes low-risk and high-risk jobs, declare the split. Otherwise the riskiest activity can set the entire policy’s premium.
Tell the insurer if you import or export anything. It is one of the most important answers you give.
Get the subcontractor figure right, because insurers rate it and a misstatement can reduce or defeat a claim. More in if a subcontractor is hurt on your job, can you be held liable?
Is a higher excess worth it when the premium climbs?
Sometimes. A simple test turns it into arithmetic. Take the yearly saving a higher excess buys and multiply it by four or five. If that covers the extra excess you would pay on one claim, the higher excess is generally the better trade. If it does not, the lower excess is.
On the standard business pack policies we place, the public liability excess is typically $500. We sometimes set it at $1,000. On a standalone general liability policy, $1,000 is usually the standard excess and $2,500 the next step up. Some wordings also carry a separate “worker-to-worker” excess, for an injury to a subcontractor. Not every insurer has one.
The test only holds for a business that does not claim often. The saving is never a given either. Some insurers discount a higher excess heavily and others barely move, so it has to be tested quote by quote. More in why we sometimes recommend a higher excess.
If I take the cheaper quote, which jobs could lose cover?
Any job its restrictions cut out, and that can include ordinary work. The price alone will not tell you which. Put the two quotes side by side on cover and restrictions, then check the limit and the excess. On the cover, look for:
- Cover you genuinely need. Endorsements, the clauses an insurer adds to a policy, can remove or limit it.
- Jobs at height, underground or outside. Restrictions on that work can leave ordinary jobs uncovered.
- Jobs on the wrong kind of site. Restricted-industry endorsements exclude whole kinds of site, such as airports, ports, public utilities or mining. One job in the wrong place can be uninsured.
- A subbie hurt on the job. The policy can limit worker-to-worker cover, the cover for personal injury to a subcontractor.
- A product that fails to do its job. An efficacy exclusion can restrict cover when a product you supply fails to do what it was meant to do. How far it reaches depends on the wording.
Each cut can be written on the schedule, the pages that list your cover and its conditions, or in the policy wording itself, in the policy's own language.
A policy bought online adds two risks you cannot see: what its wording excludes and how strictly the insurer will read your answers on its form. If those answers did not fully and clearly describe your occupation and what the business does, the insurer may be able to refuse or reduce a claim for non-disclosure.
What we check
Every restriction on your schedule. If we can’t avoid a restriction, we explain it in plain English on your documents when you first take out the policy, at every change, and at renewal.
When should public liability come out of the package?
When your business pack keeps going up year after year. Trades usually reach that point sooner than other businesses.
Those thresholds are from our experience.
A standalone general liability policy is quoted by an underwriter through a broker. An underwriter can only get through so many quotes a day, so they prioritise the bigger risks.
A standalone policy does not always lower the premium, but it can stop the annual increases. After three increases in a row, that is worth a lot. How a standalone policy is arranged is on our general liability insurance page.
Changing insurer can pay even if you would rather stay. The insurer that already holds your policy often will not discount it at renewal. Offer it the same business as a new client a year later and it prices competitively to win. We often do this with truck policies.