Combined Liability Insurance - Why Are Prices Increasing?
When we talk about commercial insurance, there are two main types of cover
, for liabilities and property. Certain types of business may choose to obtain cover for commercial liability insurance.There are various reasons for this, for example a business may decide that the assets they own are at such a small level that they do not need to insure them, or they could be covered under a home insurance policy or through a maintenance contract with the equipment suppliers. Alternatively, they may decide that the liability risks the business faces are far more important and spend their monies on this element of cover only.
For insurers, liability claims can cause more of an issue than simple property losses. If you have a basic business building insurance policy, you will have the structure insured for an agreed amount. This way, the providers of the cover can easily work out what their potential, maximum, loss is likely to be. This is exactly equal to the amount that the building is insured for.
Now, consider public liability insurance. You will arrange cover based on a limit of indemnity. The usual minimum limit is 2,000,000. Most companies will provide this on the basis of "any one occurrence". Simply put, you could potentially make any number of claims up to the limit of indemnity in any one period of insurance.
Products liability insurance on the other hand is on an "aggregate" basis. Meaning the total amount of all claims put together cannot exceed the limit of indemnity. Employers liability, the other main type of cover, must be in place, by law, at a minimum limit of 5,000,000 any one claim. Most business insurance policies provide this cover at 10,000,000 as standard. The potential though is high, for there could, in theory, be any number of losses at near to, or at, the maximum limit of indemnity.
We have been, in the past few years, through a terrible, deep recession. Property prices have plummeted, businesses have gone bust and inflation has dropped to an all time low. But, the cost of liability insurance claims has increased, year on year, without fail.
The reasons for this are many and varied. Part of the cause is no win, no fee solicitors who are providing potential claimants with easier access to pursuing claims. Their costs are a significant part of any settlement and are not decreasing. Long term care costs for injuries to people (from all three types of liability) are also increasing. Lastly, people do feel, quite rightly in most cases, that if they have been injured in any way, then someone, usually a business or company, must be liable.
On top of all this, the insurers have been hit with a double whammy. There are approximately 10% less businesses buying insurance, whether through choice or because they have ceased to exist. In addition, the premiums that the insurers receive, and invest, have been providing much, much lower returns.
All of this means, that for a combined liability insurance policy that would have cost 750 three years ago, you would be looking at in excess of 1,000 nowadays. This is a cumulative, year on year, increase of around 10%.
There is a silver lining though. Although there have been problems, as noted, with insurers pricing. There is now more choice than ever before when you are looking for a liability insurance quote. There are less business insurance brokers out there, either because larger companies have been on the acquisition trail or brokers have suffered, and stopped trading, through the harsh business conditions. This does not mean though that there are less places for you to go to when looking for a comparison.
The internet has provided the business insurance world, as with other financial services, with a much easier, and quicker, route to market. You need to ensure though, that when looking for insurance on the net that you pick a company that is independent. This means that they have the ability to go to as many underwriters or capacity providers as they choose, to give you the best price for the widest cover.
by: Jack Brown The Effectiveness Of Liability Insurance For Doctors Fallen Minister-municipal Liability Case Will Shredding Documents Reduce Our Company's Liability? Use Best Practices In Forming A Limited Liability Corporation Purchasing business insurance for your office Premises Liability and the Expert Witness Looking For Liability Insurance Tx Cheapest Cheap Liability Insurance In Texas Employers' Liability Insurance: Getting it Right Is Demand for Employers' Liability Insurance Changing? Reliability breeds trust Certain Facts Related to Public Liability Insurance Policy The Reliability of Used Lawn Mowers