Since 2019, the average cost of public liability insurance has risen by close to 60%, according to the Insurance Council of Australia. Some businesses in higher-risk industries have seen their premiums multiply several times over.

According to YouGov research commissioned by Prospa, 80% of small business owners and decision makers said unavoidable costs had squeezed their profit margins over the past 12 months. Insurance ranked second among the costs putting the most severe pressure on margins, named by 33% of respondents, just behind fuel. Blue-collar businesses felt it more, with 44% ranking insurance among their top three pressures, compared with 30% in white-collar industries.

Premiums are shaped by forces well beyond your control. But parts of the market have started to ease, and the cover you choose, the excess you carry and the way you approach renewal all influence the final bill.

Why business insurance costs more than it used to

A legal bill in another state, a flood two regions away and the price of timber can all find their way into your renewal notice. Insurers price each policy partly from the cost of claims across the whole market, and those costs have been climbing on several fronts at once.

Liability claims have become more expensive to settle, with legal costs and claims for psychological injury among the biggest contributors. Extreme weather adds to property premiums: the insured cost of those events across Australia has averaged $4.5 billion a year over the past five years, up 67% on the five years before. Repairing and rebuilding also costs more than it did before the pandemic.

On top of all that, state taxes and levies add between 9 and 40% to a premium, depending on where you operate. Because most policies reprice once a year, these increases tend to arrive in a single jump at renewal, which is harder to absorb than a regular monthly bill.

Hospitality, live music, tourism, outdoor recreation, construction and businesses that provide services to children or vulnerable people have felt the sharpest increases.

For public liability, premium growth has started to slow as competition between insurers picks up. That gives you more room to shop around at renewal than you’ve had for several years.

What you can do to keep your premium in check

Check your cover still matches what your business does

Your policy was priced for the business you ran when you took it out, and since then you may have bought a second van, moved into a bigger space, taken on staff or added a service. Each of those changes can leave a gap in your cover, and dropping a product line or selling equipment might mean you’re still paying to insure something you no longer have.

The Australian Government’s business insurance guidance suggests reviewing your policies whenever the business changes and before each renewal. Your policy will also set out what you need to tell your insurer and keep updated, as an unreported change can affect how a claim is handled.

If a client, landlord or head contractor requires a set level of cover, check the figure in the contract against the figure in your policy. And if more of your business now runs online, ask whether your policy responds to a cyber incident. Our guide to cyber security for small businesses covers the protections that reduce the risk.

Insure your assets for what they’re worth now

Equipment loses value every year, and so does the amount an insurer will pay out for it. Most policies don’t compensate for depreciation, so the sum insured on a vehicle or machine should be checked against what it’s worth today.

Building and replacement costs have also risen, so the amount you insured your fit-out or stock for a few years ago may fall short of what it would cost to replace today. Checking these figures once a year keeps you from paying for value that no longer exists, or from finding out at claim time that your cover falls short.

Weigh the excess against the premium

Raising your excess lowers your premium because you pay more of the cost yourself each time you make a claim. That trade can make sense for a business with healthy cash reserves that rarely needs to make one. The test is whether you could pay the excess after a bad week without disrupting the business.

Some policies carry different excesses for different events, such as theft, storm or liability claims. Consider them together before choosing a level.

Ask about packaging your policies

A business package bundles several types of cover, such as property, liability and business interruption, into one policy. It can cost less than buying each cover separately and bring your renewals together on one date.

The trade-off is that it may include cover you don’t need. Ask what each type of cover costs, and for the one that matters most to your business, compare the package against a standalone policy.

Decide how you pay

Ask your insurer whether paying monthly costs more in total than paying annually, and compare the two figures side by side.

If you pay annually, the premium comes out of your account in one large payment. To avoid surprises and ensure the cash is there when the bill arrives, plan for it in your cash flow forecast. Some brokers also arrange premium funding, a loan that spreads the premium over the year, which carries its own interest and fees.

How to get more from your renewal

Start before the renewal notice lands

Insurance tends to renew on autopilot alongside software and phone plans, and it deserves a place in any review of your recurring costs. The catch is timing: if you only start thinking about insurance when the renewal notice arrives, rolling over becomes the easiest option.

Put a reminder in your calendar six to eight weeks before each policy ends. That gives you time to update your details, request quotes and ask questions.

Compare what’s covered as well as the price

Two quotes a few hundred dollars apart can cover very different things. Before you compare prices, line up the limits, excesses, exclusions and conditions, such as security or maintenance requirements you have to meet for a claim to be paid. Check how each insurer settles claims too, whether by repairing, replacing or paying cash. A cheaper policy that excludes the risk you’re most exposed to can cost you more in the end.

Use AI to read the fine print

Policy documents can run to dozens of pages, and AI tools are good at turning them into something you can scan in a few minutes. You can ask your go-to AI tool to compare two quotes side by side, list every exclusion or explain a clause in plain English. A prompt as simple as this gets you started:

“Compare these two business insurance quotes. List the differences in limits, excesses, exclusions, conditions and how claims are settled, and flag anything I should ask the insurer about.”

Those documents also contain your business name, ABN, address and sometimes personal details, so remove them before uploading anything to a public AI tool. The same care applies whenever you use AI with your business data. AI can also misread a term or miss a condition, so treat what it tells you as a list of questions and confirm anything about your cover with the insurer or a broker.

Your renewal checklist

Diarise each policy’s end date, six to eight weeks ahead
List any changes to your premises, staff, services, vehicles or equipment
Check sums insured against today’s replacement costs
Find out what cover your contracts, lease or licence require
Decide on excess you could comfortably pay
Get atleast two alternative options
Compare limits, excesses, exclusions and conditions, then price
Ask whether paying monthly costs more in total

Broker or comparison site?

For straightforward cover, a comparison site can get you a set of quotes in minutes. Most comparison sites don’t include every insurer, though, and they usually list the providers that pay them, Moneysmart notes. Using more than one site and checking who runs each one gives you a broader view.

A broker acts on your behalf and can approach several insurers, negotiate terms, advise on the cover you need and help if you have to make a claim. Brokers are paid by commission from the insurer, a fee from you, or both, so ask how before you start. Every broker must hold an Australian Financial Services licence or be authorised under one, which you can check on ASIC’s professional register.

A broker tends to earn their fee when your business is in a higher-risk industry, needs several types of cover, has contract requirements to meet, has a claims history or has been declined before. Much of the cover small businesses rely on, including public liability and professional indemnity, is also sold with fewer consumer protections than car or home insurance. The more complex the policy, the more that advice counts.

Neither route suits every business, and some owners use a comparison site for a simple policy and a broker for the cover that carries the most risk.