Insurers use the policy excess as a method of reducing smaller claims under insurance contracts but what is the policy excess on public liability insurance and how does it affect the cover under the policy?
The position under public liability policies in the United Kingdom Is fairly standardised but as with all such general questions there may be circumstances where this information does not apply to your own policy and you should always check your policy carefully to ensure that you fully understand the cover that is provided.
Why is there are an excess on public liability insurance?
Insurers use the policy excess to reduce the frequency, the number, of claims under policies by deterring claims under a certain value. The benefit of this to insurers is that whilst the claims themselves may be fairy low n value the actual costs of settling claims is similar to claims of much greater value and removing these claims from a policy enables the product to be offered at a more competitive premium.
How is the policy excess applied to public liability insurance?
The cover under a public liability policy is provided in respect of the proposers legal liability for personal injury and property damage arising in the course of the business. This essentially means that claims under the policy can arise in two ways, claims for property damage and claims for personal injury and the cover provided by the policy differs as regards the policy excess for the different types of claim.
Is there a policy excess for personal injury claims under a public liability insurance policy?
There is not normally an excess applicable to claims arising from personal injury under the policy. This means that the insurer bears the full cost of any claim under the policy including costs with no contribution from the policyholder.
Is there an excess for property damage claims under a public liability insurance policy?
The policy will normally contain an excess in respect of claims arising from third party property damage. This will generally be £250, but may differ from insurer to insurer and policy to policy depending upon the particular product, your occupation and the type of work you undertake.
This means that you will be required to bear the first £250 of each and every claim under the policy.
Why are personal injury and property damage claims treated differently?
A key driver behind the use of the policy excess s to reduce the number of claims reported to insurers. The value of a claim in respect of property damage can usually be quite easily assessed and is not likely to fluctuate greatly particularly where the amount o damage is fairly small.
In contrast personal injury claims are more volatile and what may look like a small claim can soon escalate and it is very much in the interests of insurers to have the claim reported to them and take control of the claim as soon as possible. The imposition of a policy excess would deter policyholders from doing this.
Any excess that this applicable to your policy should be identified to you in your quotation or renewal documents and will be shown in the policy schedule that details your cover.
Can I obtain a discount off my premium for a higher excess?
In principal this is an option that is available for you to consider. In practice this is seldom a cost effective measure unless you can afford to carry a significant excess. In package contracts the facility is not generally available.