How does a public liability excess work?

What this means for the business

Think through a normal month’s work. The useful details are often found in the jobs that differ from the usual routine.

Do not assume that a larger limit also means wider cover. The figure and the scope answer different questions.

Look beyond the value of the invoice and consider: small property-damage claims near the excess; different excesses for heat, water or underground work; and several incidents arising from separate jobs. None of these situations has an automatic insurance answer. They are useful prompts for checking the scope of the quotation.

Write down the facts rather than estimating them in a rush: each excess shown on the schedule; when and how it becomes payable; and whether related claims are grouped. Where the position varies between jobs, explain the usual work and the exception.

Use the policy summary as an introduction, then turn to the schedule and endorsements for the details that affect the work. Query any uncertain point while other quotations are still open to you.

Examples worth considering

Run through these situations against the jobs you accept:

• Small property-damage claims near the excess
• Different excesses for heat, water or underground work
• Several incidents arising from separate jobs

The policy response depends on the full circumstances. A short list on a webpage cannot replace the wording.

Consider “different excesses for heat, water or underground work” first, using a contract or business record where one is available. Then look at “small property-damage claims near the excess” and record any uncertainty instead of hiding it in a rough answer.

Do not overlook “several incidents arising from separate jobs”. If a form does not leave enough room to explain it, ask the provider how the information should be recorded.

Once the documents arrive, check that these details have not been replaced by a description that is narrower than the work.

Details to gather for the quote

Write down the answers to these points before opening the form:

• Each excess shown on the schedule
• When and how it becomes payable
• Whether related claims are grouped

Take “each excess shown on the schedule”, “when and how it becomes payable” and “whether related claims are grouped” one at a time. Confirm what is known, make a careful estimate where necessary and avoid changing an answer merely to obtain a lower price.

Afterwards, compare the answer with the wording about cheap cover with an unaffordable excess is poor value. It should not point in a different direction from the information you supplied.

Two reminders from this page are “cheap cover with an unaffordable excess is poor value” and “do not settle a claim privately without advice”; keep them beside the documents when you check the quotation. If the policy takes a different approach to “each excess shown on the schedule”, ask about it before the cover is needed and retain any written reply.

Read the finished form once more before sending it. A missing activity is easier to correct at this stage.

Parts of the policy worth finding

• Cheap cover with an unaffordable excess is poor value
• Do not settle a claim privately without advice
• Keep the excess in your cash planning

Read the schedule and endorsements beside the main wording. Important restrictions are often shown there.

Keep these notes with the policy

Put the proposed start date beside the first job that needs cover. There should be no unexplained gap.

Then look at the least typical job you expect to accept. If it falls outside the description, deal with that before taking it on.

Store the documents somewhere another responsible person in the business could find them. That is useful if an incident happens while you are away or unable to deal with it yourself.

There is also a page-specific detail to carry forward: keep the excess in your cash planning; check how this affects the jobs you accept and ask for clarification if the policy takes a different approach.