New businesses

What you need to get an insurance quote as a new business

In short: Six things, and none of them is a set of accounts. What the business will do and for whom, what you expect to earn in the first twelve months, where you and your colleagues did this work before, what qualifications you hold, whether anything has ever gone wrong, and when you want cover to start. Estimates are expected and acceptable. What is not acceptable is guessing at the claims question — that one has to be answered from actual knowledge, after proper enquiry.

1. What the business does, in specific terms

“Consultancy” tells an underwriter nothing. “Structural engineering consultancy: permanent works design for building control submissions, residential structural inspections for prospective purchasers, temporary works design with category 2 and 3 checks subcontracted” tells them almost everything they need. Specificity is not a trap. It is what lets an underwriter price the risk you actually carry rather than the worst risk your job title could imply.

Include anything unusual, anything you are only occasionally asked to do, and anything you plan to start doing within the policy year. Activities that emerge mid-year and were never disclosed are where coverage arguments begin.

2. Expected income for the first twelve months

An estimate. Underwriters rate professional indemnity largely on fee income, so they need a figure, but nobody expects a new business to know it precisely. Give your realistic expectation rather than your ambition or your worst case, and be ready to say how you arrived at it — day rate times expected working days is a perfectly respectable answer.

If the year turns out materially different, tell your broker at renewal or before. Most policies handle it as an adjustment. Silence is the thing to avoid.

3. Where you did this work before

This is the single most useful thing a new business can give an underwriter, because it is what stands in for a trading history. Employers or practices, roles, dates, and the kind of work involved. A chartered professional with fifteen years at a large contractor is a different proposition from a first-year practitioner, and the file should say which one you are.

Include whether that earlier work was covered by an employer’s or practice’s professional indemnity policy, and whether any run-off cover still applies to it.

4. Qualifications and professional memberships

Chartered status, professional institution membership, licences, accreditations, and any scheme membership that governs how you work. These matter twice over: they evidence competence, and for some professions they set the minimum terms the policy has to meet.

5. Claims, complaints and circumstances

The one question you cannot estimate. Proposal forms ask whether, after full enquiry, you are aware of any claim, complaint or circumstance that might give rise to one — and for a new company that question reaches the people, not just the entity. Something that happened in previous employment is disclosable if it could attach to you.

“After full enquiry” means you are expected to have asked, not merely to have not remembered. Disclose anything you are unsure about and let the underwriter decide whether it matters. A disclosed matter is a rating factor. An undisclosed one is a reason to decline a claim later, which is the expensive outcome.

6. When you want cover to start

A date, which can be in the future. If you have incorporated but not yet begun chargeable work, the sensible start date is on or before your first job. Say so rather than leaving the field blank — a blank tends to become “today”, which may be earlier or later than you want.

What you do not need

Filed accounts. Three years of turnover. A list of completed projects. Last year’s staff numbers. Certified contract values. If a form insists on these from a business that has not traded, the form is wrong, and the answer is to use one built for a new business rather than to invent figures. Inventing figures on a proposal form is a non-disclosure problem waiting to happen.

Frequently asked questions

Do I need a company number to get a quote?

Not to get a quote, but you will need it before cover incepts, because the policy has to name the correct legal entity. Sole traders are insured in their own name and trading style.

Can I get a quote before I have any clients?

Yes. Having no signed contracts yet is normal for a new business and is not a barrier. Describe what you intend to do and who your likely clients are.

What if my income estimate is wrong?

Tell your broker. Most professional indemnity policies rate on estimated income and adjust at renewal against actual. A material understatement discovered at claim stage is a different and worse conversation.

Do I have to disclose something from a previous employer?

If it could attach to you personally, yes. The claims question asks about the people as well as the company, and an underwriter would rather see it now than discover it later.

How long does a quote take?

It depends on the risk. Straightforward new businesses in mainstream professions are usually quick; anything involving unusual activities, high limits or disclosed claims takes longer because a person has to look at it properly.

Starting out, and no trading history to show?

Our new-business proposal forms ask what you expect to earn and where you did this work before, instead of turnover figures you do not have yet. Bristol-based, FCA-regulated, wordings first.

Call 0117 325 0027 info@apexinsurancebrokers.co.uk

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This page is general information, not advice on a specific policy.

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