What affects the cost of public liability insurance?

Putting the question into context

The policy needs to match the work as it is really done. A tidy trade name on its own does not tell an insurer enough.

Cover applies within the stated dates, activities, limits and conditions. That sounds plain, but it is where many misunderstandings begin.

A sensible description of the risk should take account of: heat, height, depth or work near water; large turnover or frequent public contact; and past claims or incidents. The examples are there to test the description of the business. The policy wording still decides how a claim is handled.

Have the following details beside you: annual turnover and wage roll where asked; years of experience and qualifications; and percentage split between different activities. If one point is uncertain, ask how the question should be answered and keep the reply.

Do not file the documents unread. The business description, limits, excesses and endorsements deserve a first-day check. Make the enquiry before accepting the policy rather than after an incident.

Where the exposure comes from

These are the less obvious ways trouble can start:

• Heat, height, depth or work near water
• Large turnover or frequent public contact
• Past claims or incidents

If one of these examples is a regular part of your work, make sure it has not been lost in a broad trade description.

Start with “heat, height, depth or work near water”. Make a note of the current position and where that information came from. Then check “large turnover or frequent public contact” in the same way.

The remaining point, “past claims or incidents”, may affect price, availability or policy terms. A short factual explanation is usually more useful than a blank answer or an option that does not fit.

Keep the answers with the resulting documents. That makes it easier to spot a restriction that does not match what was declared.

Useful records for the quotation

Recent invoices and contracts should help you establish:

• Annual turnover and wage roll where asked
• Years of experience and qualifications
• Percentage split between different activities

The provider may use “annual turnover and wage roll where asked”, “years of experience and qualifications” and “percentage split between different activities” to decide which terms it can offer. Use accounts, contracts and job records where they help, and explain any expected change in the year ahead.

A customer may later read only the certificate. You should still keep the fuller schedule and endorsements for your own records.

Two reminders from this page are “the lowest price may carry important restrictions” and “estimates should be reasonable and updated”; keep them beside the documents when you check the quotation. If the policy takes a different approach to “annual turnover and wage roll where asked”, ask about it before the cover is needed and retain any written reply.

Save the answers you submit. Check the insured name, business description and dates when the policy documents arrive.

Do not skip the endorsements

• The lowest price may carry important restrictions
• Estimates should be reasonable and updated
• Read endorsements added to the schedule

If a clause is unclear, ask for an explanation before the cover is needed. Keep that explanation with the policy.

Before you submit the quote

Read a recent contract and compare its insurance clause with the limit and business description you plan to buy.

A short written record can save a long disagreement about what was said when the cover was arranged.

Do not discard the earlier policy when a new one begins. A claim can arrive well after the work was completed, so the documents in force at the time may still be needed.

Do not let the following point get buried: read endorsements added to the schedule; check how this affects the jobs you accept and ask for clarification if the policy takes a different approach.