What factors affect the level of cover I need?

Deciding how much cover to invest in can be tricky, in this guide we break down some of the main factors that can have an affect on the level of cover you might need.

There’s no legal requirement to have public liability insurance, though if you do choose to purchase cover there are several factors that can affect the level of cover, you’ll need.

  • The size of your business
  • The type of business you have
  • Your claims history
  • Risk appetite
  • If your business is online only
  • Contractual obligations
  • Trade and industry body standards
  • Potential for ongoing medical costs
  • Industry averages

Business size

Naturally, the size of your business is going to play a large part in how much cover you need. The reason for this is fairly simple: the larger your business is, the more risk you have that something could go wrong.

For example, if you’re self-employed make-up artist who handles all of your clients yourself and makes house calls, then you likely won’t need as much cover as a hairdresser that has a salon with a few employees and owns a salon of their own. This is because when you have employees and a physical location, there’s the chance that they may do something that least to an accident or a claim, or that the public may get injured in the store itself.

For context, £1 million would be the minimum cover level you can select, with £5 million being the highest.

    Amount of contact with the public

    As we mentioned before, if you’re regularly interacting with members of the public then you’ll need a higher level of cover.

    For example, a small crafts business who only sells their products through an online store or at market stalls will need a lower level of coverage than a clothing brand who has perhaps 1-2 small stores. This is because retail store will have employees who are interacting with the public face-to-face every day, compared to the seller who deals only with online sales.

      Medical and/or ongoing healthcare costs

      Something to consider when you’re looking at how much cover public liability insurance cover you might need is the potential for medical or ongoing care costs that may be the result of a claim made against you.

      Each claim for accidental injury is different, and the results will be dependent on the individual circumstances. So, if you feel like the type of claims that might arise from your line of work are likely to result in the claimant needing private or ongoing care as a result of any injury that might be sustained, this is something to factor into your choice of cover level.

        Contractual obligations

        Although public liability insurance isn’t mandatory, there are still some occasions where you’ll be required to have it. In some cases, clients (such as local authorities likes councils or regulated business) might request that you have a set amount of public liability insurance before they’ll hire you for a job. 

        This may also be a point that comes up if you undertake work for official bodies, such as local councils for example. Typically, if you’re asked to have cover it will be a minimum of £1 million.

        With AXA you can not only pick the level of cover that best suits these requirements, but you’ll be able to instantly get proof of you cover through your online account too.

          Trade and industry body standards

          Depending on the trade or industry you work in, there might be an industry standard already set for the level of cover you should have. Though these may not be legal requirements, to make sure you have the same competitive edge as others in the industry, it may work as a guideline for cover.

            Risk appetite

            Risk appetite refers to how much risk you as a business owner are willing to accept once you consider all of the factors outlined in this guide. Ultimately, it is that level of risk that will help determine how much cover you think is appropriate.

            Occupations in certain industries that tend to be classified as a higher risk – for example: builders, electricians, window cleaners etc – may benefit from choosing a higher level of cover. This is because the riskier your business activities, the more expensive a claim against you is likely to be. In these cases, you may want to consider a higher level of public liability cover.

            For example, if you run a consultancy and your client’s laptop gets broken in your office that claim is likely to be smaller than a claim made against a builder who left tools on the ground and caused a customer to trip and sustain a serious injury.

              Claims history

              If you’ve made a claim on your insurance in the past then this won’t directly affect the level of cover you need. However, it is likely to affect your businesses risk appetite.