Why do smaller businesses pay more for insurance?

Based on our own data, small businesses pay less for insurance... but it costs them more.

We looked at our own book of clients to understand how much smaller businesses are paying for insurance versus the big boys, and we found a couple of interesting things.

Smaller businesses - by which we mean businesses with lower revenues - typically pay less for their insurance. So how come small business owners tell us their insurance feels expensive?

That’s because the smaller the business, the bigger the share of its revenue that goes on insurance (when looking at the £ value of their premium as a % of their revenue).

Here’s how premiums compare to revenues on our current book:

• Under £250k turnover: around £580, or 0.86% of revenue
• £250k to £1m: around £1,730, or 0.40% of revenue
• £1m to £5m: around £4,450, or 0.24% of revenue
• £5m to £25m: around £9,150, or 0.12% of revenue
• £25m+: around £64,070, or 0.17% of revenue

*Data based on a random sample of 1,200 policies across 600 clients, as of August 2026.

A firm turning over under £250k spends around 0.86% of its revenue on cover. By £1m to £5m that's down to 0.24%, and above £5m it's nearer 0.12%.

In cash, the small firm pays far less, around £580 against £9,000 for a larger one, but as a slice of the money coming in they carry roughly seven times the weight.

That's the difference between what a premium costs and what it feels like it costs.

A £9,000 bill on millions of revenue barely registers to an operator. A £500 bill on a business still finding its feet lands on the same desk as rent, payroll and the tax bill, and it competes with all of them.

Once a firm reaches over £25m turnover, this bucks the trend a little. But we don’t have a huge amount of data on businesses that large.

Are small businesses being over-charged?

None of this means the small firm is overpaying. The price just reflects the risk, and risk doesn't neatly scale with size or revenue. A two-person startup can still get sued or suffer a data breach before it's made a penny. But it does mean the smaller you are, the more insurance asks of you.

Why is business insurance so expensive?

As a small business owner, insurance certainly feels expensive.

Part of it is that there's a floor to what insurers can charge. Being small doesn't take your risk to zero. A one-person company can still face a six-figure claim, so there's a baseline cost to covering it that the premium can't drop below, however modest the business.

That's why the smallest firms end up paying the largest share of their revenue: they've hit the floor while their turnover is still climbing towards it. Even pre-revenue businesses need to take out business insurance.

So what are REALLY HONEST doing about it? Two things in particular.

For our customers, every claim-free year earns you a real discount; a no claims bonus. The same idea as your car insurance, so being a good client actually pays you back.

Also, if you do have to make a claim and it's your only claim in a year and it comes in under £25k, your premium won't go up as a result. Even if we have to absorb the cost ourselves.

When we quote a small business, we don't wave it off as "only £500".

To those businesses it's real money, weighed against everything else they're trying to fund.

The least we can do is be straight about what it buys and why.

Can I use my revenue to estimate my insurance premium?

When it comes to data, there is an expression: correlation does not equal causality. This is important here as it means that even though there’s a trend between two things, it doesn’t mean that one causes the other.

That is to say, our clients pay a premium that is aligned to their risk profile. Revenue is one small part of that risk calculation and there happens to be a trend in our own book.

The best thing to do would be to request a quote, and compare it against our % figures above. We’ve love to talk more about it!

*Data based on a random sample of 1,200 policies across 600 clients, as of August 2026. Reviews taken from Trustpilot.