Liability Insurance – Are you under-insured ?
Many small businesses are under-insured and take out the minimum £1million public liability insurance thinking that they will be fully covered for any claim, and in most instances £1million worth of cover would be enough.
But, have you considered the possible consequences if a member of the public is injured or if a property you are working on is completely destroyed.
Scenarios where £1milion public liability insurance would not be enough.
Small Signage Company
A self-employed sign erector takes out a public liability insurance policy for £1million as he only carries out small jobs erecting signs on shopfronts etc. After fitting a new sign to a new newsagents there is an unusually high wind and the sign is dislodged and falls onto a customer entering the newsagents causing a severe injury.
After an investigation, the signage company business is found liable because the sign had not been secured properly and the injured party was awarded £1.8million. As the business only has public liability cover for £1million, they could be sued by the injured party for the remaining £800,000.
In this instance, for an additional £21.00, the business could have covered themselves for £2million and for less than £63.00 they could have covered themselves for £5million of public liability insurance.
As sole trader only carries small electrical works in private homes in central London, no major jobs are carried out so the electrician takes out public liability insurance covering themselves for £1million.
A few weeks after fitting a new light to a 3rd floor flat in central London there is a major fire. A fire brigade investigation attributes it to faulty wiring in the light fitting and the electrician is found liable as a wire had come loose and caused a fire whilst the homeowner was away from the property.
The cost of re-building and refurbishing the flat, plus the cost of damage caused to the other flats in the property amounts to £1.5million. Whilst the homeowner’s insurers repaired the damage, they would look to recover their full costs from the electrician’s insurers.
As the electrician only has £1million of public liability insurance, their insurers would only pay the first £1million and the electrician would be personally liable for the remaining £500,000.
In this instance, for an additional £21.00, the business could have covered themselves for £2million and for less than £38.00 they could have covered themselves for £5million of public liability insurance.
What should I do?
Both of these scenario, may seem extreme, but case studies show that these incidents have happened and many small businesses are under-insured. So, although you may have cover for public liability insurance, are you sure that you will be fully covered should a major incident happened?.
For a few extra pounds you could increase you public liability cover and have peace of mind knowing that should the worst happen, you would be fully insured.
Although this article relates to public liability insurance, the same applies to any cover you may have in place such as professional indemnity insurance, business interruption insurance as well as buildings insurance and you should review the cover you have in place on a regular basis, also taking into account changing and emerging risks that you may face.
Speak to one of our team who can offer you Public and Employers Liability Insurance to meet your needs – Call: 0800 731 3378
*Please note that although we cannot advise you how much cover you need, we can provide guidance on some the risks you may face and provide cover based on your requirements. There may be some covers that we cannot provide and in these circumstances you can contact BIBA who will provide you with details of where you can obtain this cover.
To find out more about under-insurance you can read he BIBA guide: – How to avoid under-insurance
Mastercover are members of the British Insurance Brokers Association.