“This quote is the cheapest” – someone says at the general meeting, and the sentence leads everyone astray, because the essential part is missing: cheaper compared with what? In insurance, price on its own is not information – it becomes information only together with the content. The same premium can be an excellent buy and a quiet risk; this article shows how to tell which one you are looking at.
- Behind a difference in premium there is almost always a difference in content: scope of cover, sums, limits, deductibles, exclusions.
- The typical sources of a “cheap” quote: lower limits, a higher deductible, a narrower list of covers, stricter exclusions.
- The method for a good comparison is a content-based table: every quote against the same criteria, side by side.
Where does the difference in premium come from?
If two quotes for the same building differ meaningfully in price, there is a reason – and the reason is almost always to be found in the content. The typical sources: one quote gives lower limits (for liability or glass, for example), applies a higher deductible, has a narrower list of natural perils, has stricter exclusions, or simply contains less cover. Less often the reason is a genuine market difference: the insurer's risk appetite, a current campaign. The manager's job is not to guess the reasons but to make the content visible – that is what the comparison table is for.
When is cheap really cheap?
When its content is complete measured against the building's needs. If the lower limit is realistic given the building's claims profile, if the kitty carries the higher deductible comfortably, if what is missing from the narrower list of covers is exactly what the building did not need anyway – then the lower premium is a real saving. This situation exists, and it comes up regularly: sometimes the market really does give a better price for the same content. That is precisely why it is worth going out for competing quotes regularly.
When is cheap expensive?
When the missing content falls exactly on the building's real risk. A low liability limit on an old-fronted building in a busy street; water damage restrictions on a panel block whose risers are waiting to be replaced; strict maintenance exclusions on a listed building – when a claim comes, these combinations take back several times what the building saved on the premium. Such a quote is not cheap but partial: the building has quietly taken part of the risk back onto itself. On the role of limits and deductibles: deductible logic, underinsurance.
The method: a content-based table
The antidote is not suspicion but system: we break every quote down against the same set of criteria – covers, sums, limits, deductibles, exclusions, service – and the premium only makes sense alongside that content. So instead of the label “cheapest”, what the general meeting sees is this: what each quote gives and what it asks for. The article on the criteria table shows how to build the table, and you can put questions with the 5 questions list – whoever it is that brings the quote.
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