The cost of public liability insurance depends on certain very important and relevant factors. These factors also help to determine the cost and nature of the insurance policies that can be availed. While there are many different policies generally formulated and available with insurance providers for business, all policies are not conducive to all types of business.
Even though there are many different insurance providers available in the U.K today, the public insurance policy offered by Tradesman Saver is by far the most cost effective policy available online since it starts from £53 per year.
Public liability insurance coverage
The protection offered by the public liability insurance policy covers claims made for any injury or damage suffered by a third party. This also includes claims made for accidents incurred or property damage caused during the working time of the company concerned. In fact legal expenses incurred to defend or contest any claims made are also covered under the aegis of this insurance policy.
Calculating the cost of the public liability insurance
The calculation of the premium payable against a particular policy depends on 5 factors which either directly or indirectly influence the cost of the same. These factors are:
- Company size which is directly proportional to the premium to be paid and public liability insurance is one of the few policies that face increasing costs with an increase in the size of the company,
- Annual profit affects the cost and nature of the policy in a manner similar to the effect of the company size,
- Nature of business wherein businesses of certain nature as determined by the insurance provider have to pay less and others have to pay more,
- Risk factor since the riskier the business, the more will be the instances of claims on the insurance company and hence the cost of the public insurance liability will also be much more and
- Trading time which refers to the time period for which the company has been in business vis-à-vis the claims made and if claims have not been made for a longer duration of time, the insurance premiums tend to be less.
While all the above factors have a bearing in the premium calculation, more gravity is, however, given to the risk factor involved. This is because each type of business comes with a different amount of risk involved. While there are businesses which are mainly involved in trading and carry much less risk, other businesses like the construction come with a very high degree of risk associated with it.
Simply put the risk involved in a type of business determines the likelihood of insurance claims getting made. Hence the possibility of claims being made is much more for businesses which carry a higher risk and therefore the insurance premium calculated will be quite high for public liability insurance policies made for these businesses.
Level of cover available for a business
Here again the nature and the subsequent risk involved in the line of work of the business concerned, have a very important role to play. But additionally the popularity of the business, its turnover etc., also have a role to play in determining the final level of cover that will be made available against a public liability insurance policy.
It is said that both the premium incurred and the level of cover that can be availed are determined by the statistics involved. Hence additional insurance options already chosen or likely to be chosen, also directly or indirectly, affect the level of cover made available and the premium payable to avail the same.
Generally speaking the thumb rule followed by insurance providers like Tradesman saver ensures a level of cover of about £1 million as a standard. Of course a person can opt for extending this standard upto £5 million or even £10 million by paying an additional premium in certain circumstances. People involved in public sector contracts like work done for shopping centres, councils, local authorities etc., may need a higher level of cover than those provided by the standard cover.
Penalties involved for lack of cover
Public liability insurance might not be a necessity for countries like U.K but it is still advisable to opt for the same. In fact it should be made a part of the general policies followed by a company since it helps to protect the company concerned against the likelihood of any claims made by the public of a customer. This policy helps to safeguard the company when damages to property or accidental injuries are suffered by wither of them.
Thus even though there are no penalties involved in lack of cover offered by this policy, it is needed as a means of much needed protection against claims. However, the employer’s liability insurance becomes a mandatory insurance policy to have if any business hires or employs people for its work. The absence of this policy can incur a fine of about £2,500 per day.
Thus in order to avoid this sort of unpleasantness, it is always better to go through the government requirements of UK so that a company starts off with the right kind of policies, permissions and registrations in place.