Insurance is the practice of mitigating risks through a guarantee of compensation in lieu of a premium. Now, for an individual, the practice can seem simple enough. How much is my house worth? What is the current real estate prices in the area, what is the market like currently? That’s exactly how much of indemnity a home insurance should have. For an underwriter though, premium calculations include more than just the compensation.
One key factor is the location of your asset or item being insured. For the sake of brevity, we will stick only to traders insurance. However, the concepts we discuss here broadly apply to any insurance. You can just as easily replace traders insurance with any other form of insurance, and the factors will still hold true.
Location As A Sum Total Of Numbers
To the average individual, location is just a spot on the map. It is a tiny dot that represents the ground on which you conduct business. However, every tiny dot on a map comes with its own risk profile. Here are a few location specific factors that affect the premium.
- Sales Forecast – Prime city center location brings with it a larger pool of clients and hence a higher sales forecast. Naturally, your risk increases as you take in a lot more customers. You handle more vehicles that can meet with an accident. Your tools and equipment can wear out sooner than normal. You pay more premium to cover the increased risk and also because you can afford a higher cover than someone operating from a village.
- Crime Rate – You found a nice quaint garage out in one of the busy areas of town, but the locality has a high crime rate. Your premium increases as now the risk of theft and vandalism are greater for your business premises.
- Flood Risk – Setting shop in a flood prone region or near a river obviously increases the risk of flooding. You may end up paying significantly higher premiums to cover flood risks, but almost all underwriters will include a clause to void flood related damages.
- Type Of Premises – If you have a business location separate from your home address then the standard road risk policy premium will not suffice as it does not cover the business premises. For this, you need to take an additional premises cover or the combined premises insurance, which will cost you more.
Be Honest In Disclosing Business Location
We understand it can be tempting to register an address other than your actual business location to reduce the premium. However, your claims will be rejected if your registered address is not where your tools, machinery, vehicles or property was damaged.
Be honest when you give out information on your motor trade business even if it increases the premium. Whether your claim is upheld or the indemnity is just, depends entirely on the information you provide at the inception and during the tenure of the policy. Remember to inform your insurance company the moment you change your business address and pay the necessary midterm adjustments to ensure policy continuity.
You can give us a call at 01782 880140 to make changes to your registered address and for anything else. We usually affect changes within 24 hours though it can take longer owing to public holidays and weekends.