Why a recession is the WORST time to cut back on insurance

It might seem counterintuitive, but there’s a reason why a recession is the MOST sensible time to be sure your business is covered.

Regardless of whether we’re “officially” in a recession, there’s no doubt you might be looking to cut back on business spending.

In a cost-of-living crisis, with some freelancers muttering about how quiet things are, it could be easy to decide that business insurance is no longer essential.

But the reality is, you’re even more likely to put your insurance to good use in an economic downturn.

Think about it – with plenty of companies likely to face cash flow issues, there’s a greater chance that you’ll find yourself in a position where you’re struggling to get paid.

We’ve got your back

As a freelancer – whether you’re a sole trader, partnership or limited company – you often don’t feel like you have much clout.

This makes it easier for some of your clients to sit on funds when they should be paying your invoice. We’ve all been there, watching our bank account balance creep down and down while we’re owed hundreds or thousands of pounds.

The first step is to take matters into your own hands and use the Credit Control 101 technique outlined in this blog post.

But what if it’s more than a case of being slow to pay, and your client has decided your work isn’t up to scratch? If they’re threatening legal action, that’s when we can step in and make sure you have the support (and the clout) you need to get paid.

Plus, we can take all the tricky negotiations off your plate, so you can focus on delivering for your paying clients.

To insure, or not to insure

I don’t know how many people are cutting back on insurance, as we haven’t seen a drop-off at With Jack. But I’ve seen plenty of people ask for a quote – sometimes several quotes –  so they’re really serious about getting insurance. And then they either put off making a decision (procrastination is a killer) or decide they’d rather “risk it for a biscuit” than spend £14 a month.

What happens to those people?

I know that some of them run into problems because I regularly get asked, “If I buy insurance today, can you help me?”

And, of course, that’s not how insurance works.

Pay now to benefit later

You have to pay into the insurance pot now if you want to enjoy the benefits later.

It’s exactly the same way any other insurance works. You wouldn’t ring an insurance company and say, “My house is on fire – can I take out building and contents insurance today?”

The same rules apply to business insurance. You need to take out insurance today if you want help with problems in the future.

Insurance for freelancers is inexpensive BECAUSE there are thousands of freelancers contributing to a pot of cash each month, but only 5 to 10% of them will ever need to use that money. If you’ve never contributed a penny to the pot, you can’t come along and claim that cash. If it worked like that, insurance costs would be sky high!

The immediate future

Looking at the landscape in 2023, I think it’s likely that more challenges are coming for businesses and freelancers. It’s up to you whether you want to be covered, but here are three reasons it’s a good idea:

  1. Peace of mind,
  2. Having insurance marks you out as a professional, and this is attractive to good clients,
  3. Knowing that if you need to make a claim, someone else will handle it – saving you a lot of time, stress and sleepless nights – leaving you free to focus on delivering client work and keeping the money coming in.

If you’re already a With Jack customer, I hope you appreciate the peace of mind this brings. And if you’ve been thinking about insurance, but putting it off, consider taking a couple of minutes to get a quote.

We asked ourselves one important question…

What do we want out of an insurance provider?

With Jack is the answer