Is your business paying over the odds for public liability insurance?


Public Liability Insurance

Rural businesses are being warned they could be paying too much in premiums by taking out unnecessarily high levels of cover for their public liability insurance.

South West insurer Cornish Mutual is highlighting the importance of farms and other rural businesses regularly reviewing their insurance to ensure they are adequately protected – but also so they aren’t paying for cover they don’t need.

It follows Cornish Mutual seeing a trend in agricultural businesses believing they need to have £10 million of public liability insurance in place, double the amount of cover that the vast majority of businesses deem adequate.

Alan Goddard, Cornish Mutual Managing Director, said: “We’ve been proactive over many years in urging farmers to have the right level of cover in place but this has more often focused on the issue of underinsurance.

“So it is unusual and equally worrying that businesses may be taking out unnecessarily high levels of public liability cover and incurring insurance premium costs which are simply beyond what they need to have in place.”

Unlike employers’ liability insurance, there is no legal minimum requirement on public liability insurance and Cornish Mutual follows general insurance industry practice in advising that businesses should have £5 million of cover in place.

In a minority of cases where there are more complex insurance requirements, or where a contract with a customer requires a business to have a higher level of cover in place this can be tailored to suit a business’s needs.

Alan Goddard added: “There is a sound basis to the widely accepted £5 million level of cover. To put it into context, if you look across the entire insurance marketplace in the UK, providing cover for the biggest businesses and projects in the country, there will be exceedingly few claims each year which exceed £5 million. As a company we deal, on average, with less than 100 public liability claims a year and the typical amount we pay out is £1,600.”

“It is a concern that individual businesses may be unware of what constitutes a reasonable amount of cover and may in turn be paying too much for their policies.

“And from a wider insurance industry perspective there are also concerns that having unnecessarily high levels of public liability cover in place may simply encourage inflated claims against these higher figures, leading to spiralling costs for insurers and ultimately their customers.

Cornish Mutual, has a team of locally-based farm insurance experts in its Field Force based throughout Cornwall, Devon, Somerset and Dorset. They have in-depth understanding of farming and farmers’ insurance needs and are on hand to visit farms to provide personalised advice.

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