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4 min read | Published 09/07/2024
If an insurance company rejects your application for business insurance, it’s essential to understand why and what steps you should take next. Read on to find out more.
Being turned down for business insurance can leave you feeling confused and worried about what to do next. But by familiarising yourself with the common reasons for rejection, you can increase your chances of getting cover in the future.
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If you’re refused a business insurance quote, it means an insurer has decided not to provide you with business insurance. In other words, it won’t give you the cover you need to protect your business if something goes wrong.
There are several reasons why you could be refused business insurance. These include:
1. Claims history
If you have a history of claims, insurers tend to see you as high risk. This means some insurers might not be willing to offer you cover. You can also be turned away if an insurer has rejected a claim you made in the past.
2. Incorrect information
If you haven’t provided all the necessary information on your application form, or the details are incorrect, insurers might decide to reject you. It’s important to have all the required documentation and information ready when you ask for a quote.
3. Increased risk
Your business could be classed as high risk due to its location or the industry you operate in. For example, if your business is close to water, there could be an increased flood risk. Or, if your business deals with dangerous machinery or substances, there could be a higher chance of an accident. If these risks are particularly high, you could struggle to get insurance.
4. Financial instability
Insurers may be unwilling to offer you business insurance if your company is in financial trouble and is at risk of folding.
5. Fraud
Similarly, if the authorities are investigating your business for fraudulent activity, insurers are unlikely to issue you with a policy.
6. Lack of knowledge
Some insurance providers may not know enough about your industry to assess the risks, and this can lead to a rejected application.
If an insurer rejects you for business cover, here’s what you should do:
1. Contact the insurance provider
Contact the insurance provider for a detailed explanation of why it rejected your application. Ask them to send you their reasons in writing. This information can help you when you apply for another business insurance quote.
2. Check your application form
It’s worth going through the application form you submitted to check for any mistakes. Providing incorrect information or missing a section on the form could lead to a rejection.
3. Appeal or speak to the Financial Ombudsman
If you believe the decision to reject your business insurance application is unfair, you can appeal. Speak to the insurer to see if they are willing to change their mind or make a formal complaint to the complaints department.
If you want to take things further, you can complain to the Financial Ombudsman within 6 months of your refusal. The service is free to use, but it can be a lengthy process. The Financial Ombudsman reviews your case and, if it agrees with you, looks into putting things right.
4. Get another quote
If you’ve had no luck with one particular insurer, you might have better luck with a different one. It’s worth asking for a few quotes to find out.
Whether a rejection affects your chances of getting insurance in the future depends on why the insurer refused your application. Regardless, you must answer the questions honestly when you apply for another quote. This includes admitting that an insurer has rejected a previous application from you. The new insurer then decides whether to offer you cover.
Lying on your application form or attempting a cover-up is likely to worsen the situation.
You can increase your chances of getting a successful quote by:
Keeping up-to-date and accurate financial records
Providing as much detail as necessary on your application form
Complying with industry regulations and legal requirements for your business
Taking steps to lower risks in your company, such as improving your health and safety practices
If your insurer cancels your existing business insurance policy at renewal, ask whether it counts as a ‘decline’. If it does, you must declare it to other insurers.
Insurance providers can cancel your policy because you have restructured your business or if there are issues with its profitability. It could also turn you away because your business has changed activity and now works in a field that the insurer can’t cover.
In some cases, your insurance provider can cancel your policy mid-term. However, it should tell you why this has happened. It could be because the policy is unsuitable for your business, or it shouldn’t have offered cover in the first place. In this case, you may receive a refund for your already-paid premiums. But you should still declare this as a decline when you next apply for business insurance.
If you employ staff, you must have employer’s liability insurance by law. The authorities can fine you £2,500 for each day you don’t have this cover.
If you’re struggling to get business insurance, speaking to an insurance broker may be helpful. They can provide specialist advice and assist you in finding insurers that offer you the right insurance for your business.
Alex joined in 2019, bringing his expertise to a range of roles working in both the Analytics and Commercial teams. More recently he has stepped across to focus on Product, where he’s been focusing on scaling up the teams’ SME offering.
