Insurance premium funding: how to spread the cost of business insurance

Last updated 6 November 2026 · Reviewed by 360 Asset Finance Compliance

What is insurance premium funding?

Premium funding is short-term finance for insurance. Instead of your business paying the full premium when a policy starts or renews, a premium funder pays the insurer, and your business repays the funder over the policy period. You sign a premium funding agreement that sets out the repayments, the interest or fees, and what happens if you miss a payment or the policy is cancelled.

It's commonly used for business insurance, such as business packs, public liability, professional indemnity, commercial motor and fleet, and property cover. Several policies can sometimes be combined in one agreement. Whether a policy can be funded depends on the lender and the insurer.

How does premium funding work, step by step?

1. Get your insurance sorted. Your insurance broker or insurer gives you the policy details and the premium.
2. Compare funding options. We look at premium funding options across our panel and explain the repayments and total cost.
3. Sign the agreement. The lender assesses your application against its criteria and, if it approves, you sign the premium funding agreement.
4. The insurer is paid. The funder pays the premium to the insurer or your insurance broker.
5. Repay over the policy period. Your business makes regular repayments to the funder.
6. Plan for renewal. Each renewal generally needs a new agreement, so review your options before the policy renews.

Paying the premium upfront or premium funding: how do they compare?

A general summary only: exact terms depend on the lender and the agreement.

What happens if I miss a repayment or cancel the policy?

Read the premium funding agreement carefully, because this is where premium funding differs most from other business finance. Agreements commonly let the funder cancel the insured policy if repayments aren't made, so the business could be left without cover. If a policy is cancelled, any refund of unused premium may go to the funder first to reduce what's owed, and the business may still owe the rest. If you're thinking of changing or cancelling a funded policy, talk to your insurance broker and the funder first.

Pros and cons

Possible pros:

• Spreads a large insurance cost into regular repayments.
• Keeps more cash available for running the business.
• Several policies can sometimes be combined in one agreement.
• Can help a business keep its cover in place at renewal without one large payment.

Possible cons:

• Interest or fees mean it generally costs more in total than paying upfront.
• Missed repayments can lead to the policy being cancelled.
• Another agreement and repayment to manage, usually at every renewal.
• The lender sets its own criteria, and not every policy can be funded.

Whether premium funding suits your business depends on your cash flow and the total cost. Your accountant can help you weigh it up.

How can 360 Asset Finance help?

We're a specialist finance broker working with a panel of lenders. For premium funding, we can:

• arrange insurance premium funding through our lender panel, subject to the lender's criteria;
• compare options across the panel and show you the repayments and the total cost;
• tell you what the lender needs, usually the policy details and premium from your insurance broker or insurer, your ABN and business details;
• work alongside your insurance broker and your accountant;
• prepare the application and keep you updated through to settlement, when the insurer is paid;
• help you plan ahead for the next renewal.

FAQs

Sources and further reading:business.gov.au: Types of business insurance · business.gov.au: Cash flow · business.gov.au: Apply for a business loan

General information only. It doesn't take into account your objectives, financial situation or needs, and it isn't credit, tax or legal advice. Finance is provided by the lender you choose and is subject to its lending criteria; fees and charges apply. 360 Asset Finance is a trading name of Kuone Consulting Pty Ltd (ABN 75 647 329 002), Australian Credit Licence 566705.