How much cover is the right amount?
Once you’ve decided on what sort of cover you
should be taking out, how do you decide on the level of cover?
Something like public liability insurance
ordinarily comes with either £1m, £2m or £5m of cover, so how do
you decide on what you need?
Sometimes, the decision can be made for you.
With employers’ liability as an example, the number of staff you
employ can dictate what level of employers’ liability insurance you
are required to take out. Cover of £5m is the ordinary minimum, but
it can scale up to £10m in some cases.
The decision of how much cover you need can
also be made by other businesses or people that you want to work
for. Something that a lot of tradesmen discover is that if they are
working with larger corporate clients, they will demand a set level
of public liability insurance is in place before they can start
work with them.
This can be frustrating in some cases, but
that client is simply protecting their interests and making sure it
can prove that it has done everything it can to ensure the business
it is hiring is responsible.
When the decision can’t be made for you, then
you have to make a judgement call yourself. Unfortunately there is
no real right answer.
Your best approach is for you to assess your
risks and work out where your weaknesses are. Then you just need to
make a call as to how serious you think your risks might be and
just how much damage could be caused by an accident in that
Bear in mind that when it comes to personal
injury claims that you could feasibly face, although it doesn’t
happen very often, these can reach the millions if you are
particularly unlucky, so unleash the inner pessimist when thinking
these things through. Any decent broker will be able to guide you
on these matters, but get a firm idea of what you need in place