Which ways can I pay my business insurance premium?
The following article will delve into the payment options available for businesses who need to pay their insurance premiums through their brokers. We will list out some of the most popular options and discuss the positive and negative aspects of each. First of all, let’s start off by looking at monthly direct debit payments.
Finance (Monthly Direct Debit)
Paying by monthly direct debit popular way to pay for business insurance, especially to help manage the business’ cash flow. Generally, insurance brokers will use a third party finance company in order to help their clients pay over instalments.
General payment terms can range from 4-12 months, depending on how quick you would like to pay the premium off. Interests rates charged on the finance can fluctuate depending on the plan which would be tailored to your specific requirements.
A positive aspect of paying in this way is you can pay the insurance in smaller amounts, over a longer period of time. A negative is that costs slightly more due to the interest on the loan.
Many businesses pay for their insurances via BACS, which is a way to transfer money electronically from one bank account to another. In order to settle an insurance premium via BACS, an insurance broker will first issue an invoice to their client which will include BACS payment instructions. The insured will then transfer the money from their own account into the insurance broker’s bank account.
The benefit of paying by BACS is that it is almost instant, usually being transferred within 2 hours. One downside of a BACS payment is that you are paying for the whole amount in full in one go, where as with finance you can spread the payment over a longer period.
Business customers can also use their own credit cards to pay for their insurance, that way they can manage their own payments of the debt with their bank. Some brokers incur an additional credit card fee to process the payment meaning that the premium cost may increase very slightly (which can be seen as a negative), but you can discuss this when you are going to make payment.
Debit card is another quick and easy way to pay for your insurance. However, as per the BACS method, it can make the premium payment less economical if the business has cash flow requirements because the payment will be made in one lump sum rather than over a monthly DD which can help spread the cost.
Paying a premium via cheque is not as popular as it once was because of the fact that there are now more efficient ways to pay, i.e. BACS. Cheques can take a long time to process and there is also the added postage cost involved.
As shown above, there are many ways a business can pay its insurance premium, from direct debit, to credit card - there’s an option to suit most businesses requirements. If you are an existing customer of ours, or are interested in discussing the premium payment options available for your business, please feel free to call us on 01707 902 400. We’ll be happy to assist.