Premium Funding: How Can It Help My Business?

Premium funding for a range of business insurances is a great way to smooth out your business insurance costs over the course of the year.

It means rather than having to pay the total amount of the premium upfront, the business can pay it off in instalments, plus interest. The cost of the interest will usually be a tax deduction for the business.

Premium funding involves borrowing an amount to cover the cost of the firm’s insurance premiums, in addition to interest payable on top of the amount borrowed.

This type of funding suits businesses with lumpy cash flow.

This type of funding can be used to pay for a range of different business insurances, including product liability insurance, theft and business interruption insurance. The funder may wrap up cost of the premiums into a single loan, allowing the borrower to pay for a range of insurance policies in a single payment.

It may be an appropriate option for businesses that may not have the full amount for the total year’s insurance policy available now but have the ability to pay it off over time.

It may also suit businesses that can generate more profit from using the cash to invest in stock or other parts of their business rather than paying insurance premiums upfront. In this situation, the cost of the premiums is less that the profit that can be earned otherwise.

Premium funding is also an alternative to approaching a bank for funding. Premium funders typically won’t require collateral in the same way a bank may require security, for instance a charge over the business owner’s property.

There are many instances in which it might suit a business to use premium funding. Recently, Steadfast clients have used premium funding across a number of different industry sectors for premiums of different amounts.

In one case, an engineering business funded $45,000 in premiums, in another example an earthmoving contractor funded $9,000 worth of premiums and in another example, a construction manager funded $7,000 worth of premiums.

The value of premiums to be funded can vary from a few thousands to hundreds of thousands, depending on the client.

Most premium funding companies allow businesses to pay off the borrowed amount over 10 months. But if the business does not repay the borrowed amount plus interest, the lender has the right to cancel the policy. The business will typically have to put forward a deposit equivalent two month’s premiums to secure funding.

If premium funding is something that may suit your business, talk to Fitzpatrick & Co. Insurance Brokers today about funding options that may suit you.

Important note:
This article provides information rather than financial product or other advice. The content of this article, including any information contained in it, has been prepared without taking into account your objectives, financial situation or needs.

For more information or questions on Premium Funding or your own policy, please contact Fitzpatrick & Co. Insurance Brokers on (03) 8544 1600 or send an email at or visit

Fitzpatrick & Co. have specialised in the horticulture and arboriculture industry for over 30 years providing assistance and financial support to companies, associations and events. They are there when your industry needs you.

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