Insurance renewal: the annual decision most firms make by default

Most insurance renewals happen by inertia: a document arrives, the premium has risen a little, somebody approves it and the cover carries on describing a business that has changed. That is the expensive part — not the premium but the mismatch, because cover written for last year's turnover, headcount and activities is the cover you will discover is inadequate at the one moment it matters.

What to prepare before an insurance renewal

• Current turnover and headcount, including contractors, since both drive premium and both are commonly out of date.
• What the business now does that it did not a year ago — new services, new territories, new equipment, work at new types of site.
• The value of what you would have to replace, at today's prices rather than at purchase cost.
• Claims and incidents, including the ones you did not claim for, which you are generally obliged to disclose.
• Contractual insurance requirements imposed by clients, which frequently specify minimum limits you may not currently meet.
• Any professional work now being done in-house that used to be bought in, as that can change which policy applies.

Why price is the wrong comparison

Because two quotes are rarely for the same thing. The cheaper one often carries a higher excess, a narrower definition of the insured activity, or an exclusion that removes the main thing you were buying cover for. Comparing premiums without comparing limits, excesses and exclusions is how firms end up with a policy that is excellent value and does not respond to the claim they actually make. Read the schedule of exclusions first and the premium second, which is the opposite of how renewal packs are designed to be read.

Underinsurance is the trap nobody checks for. Many policies reduce a payout in proportion to how much the declared value understates the real one, so a building insured for half its rebuild cost can produce half a claim even on a small loss. Values quietly go stale faster than anything else on the schedule.

The disclosure that voids claims

Insurance rests on telling the insurer what they need to know, and the duty is yours rather than theirs to ask about. Incidents not claimed for, a director's unrelated county court judgment, a change of activity, previous refusals of cover — all of it is typically material, and non-disclosure is the reason claims are declined far more often than fine print is. The safe rule is to disclose anything you would feel awkward about them discovering after a loss, and to do it in writing so the record exists.

One figure on the schedule goes stale faster than the rest. Business interruption is insured on a projected gross profit as the policy defines it, so a growing company is underinsured by default within about two years.

Running the renewal properly

1. Start six to eight weeks ahead, because a rushed renewal is a renewal on last year's terms.
2. Diary the notice deadline for any policy you might not continue, which sits before the renewal date.
3. Ask the broker what has been excluded or narrowed since last year, specifically, rather than whether anything changed.
4. Check the client-imposed minimums against the new schedule before accepting it.
5. Record the renewal date, the broker, the limits and the excess in one place, with the certificate attached.
6. Keep the expired schedules — continuous cover is proved by the sequence of them, not by the current one.

Ettex Records is the right home for that register: policy, insurer, limit, excess, renewal date and the certificate, with the superseded documents retained. The date to work from is the one derived from the renewal minus your own lead time, which is the same discipline every expiry date in the business needs.