The answer to this question doesn’t relate to the size of your business though. Small businesses don't always need the minimum cover level, just as bigger enterprises may not need the most.
To help you understand how much risk your business is exposed to, regardless of its size, here are some things to consider:
How much contact does your company have with members of the public?
Depending on your business, you’ll have different interactions with the public. If you’re a cake maker, for example, a small number of clients may visit you every week to discuss designs and collect their cakes. In this case, you may decide that you only need the lowest standard of cover which is typically £1 million.
However, if you’re a hairdresser with a busy salon, your exposure increases dramatically. You may have clients and suppliers visiting your business premises all day, every day. For this type of business, you may conclude that £2 million is the right level of cover for you.
Do you have any contracts that require a certain level of public liability insurance?
It’s always best to check any contracts that you have, or are trying to win, to identify if a certain level of cover is required. Many local authorities will usually demand that you have a minimum cover level of £5 million before they’ll let you carry out any work.
Are any of your business activities excluded from the policy?
As with any insurance policy, public liability insurance will have exclusions that will not be covered in the event of a claim. Always give your insurance provider as many details as possible about your business and the work you do so that they can advise you on whether any exclusions may affect you.
Remember: Being underinsured is just as bad as having no insurance at all. Opting for the lowest level of cover in the hope that it will be cheaper could end up costing you more in the long run.
How much does it cost?
The most important thing is that you have the right amount of cover in place. The more information you’re able to provide the insurer about your business, the more accurate your cover and your premium will be.
Rather than viewing insurance as an unnecessary cost, see it as paying into your piggy bank so that if a claim needs to be made, your business isn’t left in financial ruin.