Are you underinsured, is your liability limit enough?

It’s been a year since the then Lord Chancellor announced that the Discount Rate would reduce to -0.75% from 2.50%. From the outside, these figures appear insignificant, however they have made a big difference to insurer’s costs and consequently policy premiums.

The Discount Rate forms part of the courts calculation to determine the level of award given in respect of cases involving serious injury.

When determining a claim settlement for injury the following components are taken into consideration:

  • Future loss of earnings
  • Future ongoing cost of care
  • Compensation for pain and suffering
  • Legal and professional fees
  • Financial support towards activities that can no longer be performed as a result of the injury for instance caring for dependents

When assessing future loss of earnings, the courts multiply the amount they consider the claimant will lose each year by factors such as their age and their projected mortality rate.

Whilst the change was intended to make sure that people who sustained life changing injuries where adequately compensated, the discount rate cut has affected both the motor and liability insurance market. it affects all personal injury claimants and policy holders as the amounts awarded are now substantially higher than they were previously, and we have seen some significant uplifts in public and employers’ liability claims costs and it’s not that rare to see these now run into the millions.

Example claimant Settlement before Settlement after the rate change

  • 27 year old builder with a severe spinal cord injury £2.791m to £6.325m
  •  23 year old male claimant who sustained brain injury £7.6m to £19.3m

Liability policies are written on a limit of indemnity basis, meaning that it is essential that levels which are appropriate to the exposure are sought – if an insufficient level is purchased then the additional costs will not be covered and the insured will be left to settle the remaining court award. This is especially important to the construction industry where margins are tighter and a high value uninsured claim could push a company to bankruptcy.

If a group of employees is affected in one accident at a building site, there could be a claim in excess of the market standard £10 million limit – this means clients need to be considering higher public and employers liability limits above the standard £5 and £10 million. As a result a change is being seen from the top with large building contractors and local authorities stating that the previously accepted limits of indemnity are no longer acceptable due to the potential for large liability claims to surpass these limit.

How do I increase my Public and Employers Liability Limit?

Unfortunately most insurers are not keen to give limits in excess of £5m for Public Liability or £10m in respect of Employers Liability, so an Excess Layer Insurance policy has become a cost-effective way of purchasing higher limits of indemnity.

Excess Layer Insurance, also known as Excess of Loss, is a policy designed to provide increased limits of liability over your primary insurance cover.

For Example:

A building contracting company has £5,000,000 Public Liability under their current insurance, but they have been requested to hold £10,000,000 for a contract they are starting. The Excess Layer Insurance Policy will provide the £5,000,000 over the insured existing £5,000,000 to give a total of £10,000,000

The Benefits of an Excess Layer policy is that they can be provided up to £50m on Employers & Public Liability in addition to your current insurance in increments of £2,000,000, £5,000,000 or £10,000,000.  They are also provide flexibility as they can be provided for single contracts or annual policy quotes. Higher risk trades such as scaffolders and roofers or activities with heat, depth and height requirements can also be underwritten.

Minimum premiums start from £400 for most trades and £750 for higher risk trades such as Cladding Contractors and Glazing

To learn more about what Excess Layer Insurance call or email one of our advisors. We are always happy to talk, so get in touch today to discuss.

Clarke Williams can provide the following Excess Layer Policies:

  • Excess Employers Liability
  • Excess Public Liability
  • Excess Products Liability
  • Excess Professional Indemnity
  • Excess Commercial Motor (third party property damage)

What Trades Do We Cover?

As a liability specialist with over 50 years experience in the industry, we have put together solutions with a range of insurers which allow us to provide cover for the vast majority of trades, below are a few examples of the type of contractors that we work with:

  • Building Contractors
  • Property Developers
  • Cladding Contractors
  • Glazing and Curtain Wall Contractors
  • Scaffolding Contractors
  • Steel Erectors
  • Electrical Contractors
  • Heating & Ventilation Contractors
  •  Refrigeration Contractors
  • Refurbishment and Shop Fitters
  • Clean Room Construction
  • Flooring Contractors
  •  Glazing Contractors
  • Roofing Contractors
  • Building Services Contractors
  • Hazardous Location Contractors
  • Renewable Energy Contractors

For a bespoke Contractors Liability Insurance quote contact our Liability specialists today on 01732 252 898 or email

Want to speak to one of our specialists?

Call or email us today for a comprehensive insurance policy at a competitive price.

Telephone: 01732 252898

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    Clarke Williams Ltd are authorised and regulated by the Financial Conduct Authority under reference 758683. The Financial Conduct Authority’s Register can be accessed through . We are registered in England and Wales with Companies House under number 10317065. Our registered office address is Blue Bell Court, Sovereign Way, Tonbridge, Kent, TN9 1FU.
    Clarke Williams Ltd
    Blue Bell Court
    Sovereign Way
    TN9 1FU
    Tel: 01732 252 898
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