For most businesses public liability insurance is relatively easy to obtain, but if you’re doing anything outside or the norm you could find that things get a little trickier.
As with all forms of insurance, public liability is priced based on the risk that the insurer believes you pose to them. This becomes even more of an issue if they don’t have a good understanding of your risk.
If the insurer believes that your business activities present a higher-than-usual level of risk, or a level of risk that they don’t understand, there is a good chance that they won’t offer cover.
The good news is that there are plenty of specialist insurers and underwriters who are willing to help such businesses even after the mainstream insurers have said no.
What is a ‘Hard to Place Risk’?
The term ‘hard to place risk’ is insurance industry jargon for a business that is going to be difficult to obtain insurance for.
Whilst many businesses that fall into this category are undertaking activities which are well outside of the norm, many are just normal businesses that happen to do some work considered higher risk.
A common trigger that can change a business from being a standard risk to a ‘hard to place’ risk is the types of areas it undertakes work in. Some of the following work locations are ones to look out for:
- Mine sites
- Railway stations
- Oil rigs
Whilst some of these may seem obvious, others, such as railway stations, are less obvious.
Other businesses considered to be a ‘hard to place’ risk are often those which do not fit into the standard business categories that the insurance companies use.
Although the major public liability insurance companies have vast amounts of data on many thousands of different business types, there are some businesses that just don’t fit the mould, and often these end up having to go through specialist underwriting agencies.
Duty of Disclosure
If your business falls into this category you will likely receive one of two possible outcomes from your insurance broker or company.
The first outcome is that the insurer will simply decline to offer any cover, and the second outcome is that they will offer cover, but at a higher price.
Following this outcome, some business owners are then tempted to approach a different insurance company or broker for cover, but without telling them the full story.
This could mean you end up paying less for your insurance, but it is definitely not a good idea!
By failing to tell the insurance company or broker everything that is relevant to your business you will be in breach of your duty of disclosure, which means your policy could be null and void.
Ultimately this means that any claim will not be paid, and therefore you might as well have not had insurance anyway.
As well as having your claim denied, which can be financially devastating in the event of a large claim, your business will also be unlikely to be issued a new policy from any other insurer in the future.
Use a Professional
If you are having difficulties getting public liability insurance for your business at a reasonable price, or even getting any cover at all, your best option is to speak with an insurance broker.
A good business insurance broker will be able to assess your business and use their knowledge and experience to get you the best possible outcome.
A good option can be to use a broker who specialises in your particular field or industry. To find a broker in your area you can use the Need a Broker service offered by the National Insurance Brokers Association (NIBA).
For more information on hard to place business cover please contact your insurance broker or use the services offered by NIBA which we have linked to above.