Public liability insurance is often touted as an essential part of demolition work, and for good reason. In such a high-risk industry, things can go wrong very quickly. Without coverage, you are responsible for all costs incurred.
However, insurance creates expenses of its own, and this fact often makes firms reluctant to commit. Preparing for a possible future emergency may feel unimportant when there are more immediate financial concerns right in front of you. So let’s discuss the elephant in the room: How much will public liability insurance cost, and are there ways to make that number lower?
What Is Public Liability Insurance?
For those unfamiliar, public liability insurance covers your firm against claims made by third parties as a result of your work. Some examples might include personal injury or damage to neighbouring properties. Without insurance, you are liable for all costs that arise because of these claims (for instance, legal fees). This may mean that you are unable to afford other important initiatives.
Public liability insurance protects your financial interests by shouldering these expenses on your behalf, up to a certain point. It also guards your reputation against decay. Firms with insurance appear more professional and trustworthy than those without, making clients more likely to choose you over your competitors and ultimately improving profitability.
But there’s a catch. While coverage brings more money in, it also costs you. Each month, you must pay a “Premium” – a fee that compensates the insurance company for their assistance. So exactly how much does it cost to insure a business against public liability?
Factors That Influence Your Premiums
Nature of Your Business Activities
Not all demolition companies perform the same types of work, and some activities are more dangerous than others. If you handle asbestos, for example, there is a much higher chance of something going wrong. Insurance providers take this into account.
Business Size and Revenue
The size of your business, and the revenue you bring in, tell the insurer two things: How much you can afford to pay, and how likely you are to encounter financial hardship. Small business owners and sole traders have far less wiggle room than larger firms. On the other hand, bigger companies hire more staff, potentially increasing the likelihood of an accident.
Risk and Workplace Safety
Risk is the most important factor that insurers examine. Demolition companies with weaker worksite safety practices are at higher risk, and are thus likely to cost their provider more money in the long term. This usually translates to higher premiums.
Claims History
Your prior claims history is another important indicator of risk. If you have previously made a large number of insurance claims, then the chances are higher that you will do so again in the future. The insurer then knows that they must prepare financially for this eventuality.
Coverage Limits and Inclusions
Your level of cover naturally influences the prices you pay. Just like with any other service, the more you gain, the higher the costs. The two main factors you’re looking at here are limits (the amount of money your provider is willing to pay) and exclusions (costs that they will not cover under any circumstances). But this is a balancing act. The higher level of coverage may be worth the premiums.
Read more: Demolition Insurance for Australian Contractors: A Comprehensive Guide
Reducing Your Premiums
You don’t necessarily have to accept high premiums. There are some things you can do to lower them and ensure you’re paying the best possible price:
- Instead of choosing your own insurance, work with a broker who specialises in your industry. They will help you select the best policy for your needs.
- Implement strong worksite safety protocols, and document them in writing.
- Only make claims when absolutely necessary, and keep all documentation from these incidents.
- Vet out all vendors and contractors you hire, to ensure they follow the same strict safety standards as you.
- Maintain the proper certifications at all times, and comply with SafeWork Australia’s WHS standards.
- When applying for insurance, come prepared with all evidence and documents that the provider may ask for.
- Review your policy annually, ensure that the level of coverage offered still suits your needs, and adjust accordingly.
FAQs
How Much Does Product Liability Insurance Cost?
Public and product liability insurance premiums can vary wildly, and thus it’s difficult to provide an exact estimate. The biggest factor that influences your premiums is the level of risk you are asking an insurer to accept.
Is Public Liability Insurance Mandatory?
Public liability insurance is legally required in some states. Even if this isn’t the case in your area, it’s always better to be overinsured than it is to be left out of pocket.
What About Other Policies? How Much Does Business Insurance Cost?
Business insurance costs vary based on the same set of factors as public liability policies. Note that there are dozens of different types of insurance, and each will have its own price scaling system based on the unique risks involved. But ultimately, it always comes down to risk.
Is it Cheaper to Bundle Policies?
It can be cheaper to bundle policies, if you require many forms of insurance at once. Always speak to a broker about any concerns you have, as they can provide business-specific insights based on your unique circumstances.
Demystifying Insurance, One Step at a Time
Public liability insurance is a necessary, and expensive, way of protecting your firm. But premiums should never be an unnecessary burden on your finances. By understanding the factors that influence premiums, you put yourself in a stronger position to negotiate lower prices and obtain the protection you need.
We understand that insurance is often complex and confusing. It’s meant to remove stress from your life, not add more. That’s why we’ve made it our goal to demystify and simplify every step of the process. If that sounds interesting, learn how we make the claims process easy.