When you’re looking to purchase the best insurance for your business it can be easy to feel a bit like a rabbit in the headlights when weaving in and out of each individual insurance policy. The nature and size of your business and the amount of risk involved will determine the levels of insurance that you should require, however a lot of questions hang over the amount of indemnity cover that businesses should look into purchasing.

Generally, the more risk involved in the policy, the higher indemnity cover you should look into getting. Most of the time though, your business should be covered with standard employers liability insurance and that third party cover known as public liability insurance. But what exactly is indemnity cover?

What is indemnity cover?

In the insurance world when we talk about indemnity, we’re referring to the figure that the insurance provider will cover you for in the event of a claim being made against your business. Most employers are required to have an indemnity cover of up to £5 million or they could face fines of up to £2500 per day. Indemnity is the compensation payments that an insurance provider will make to help you pay for any damages or legal fees that come your way when purchasing public liability insurance UK or employers liability insurance. £5million may seem like a large amount of money but when you consider the expenses of forking out for an incident that injures numerous people on a building site it truly is the bare minimum and a small price to pay for security.

How much indemnity cover do I need for my business?

But how do we calculate exactly how much indemnity cover we need for our businesses? Generally, a good rule of thumb to go by is to consider all the variables related to your business. How many employees do you have? How many people are working on your building site? Are the general public close by? What’s the nature of the work? A welder working high-up on a new building will require higher indemnity cover than say a library, because the differing levels of risk are obvious.

However, within the construction industry the lines between differing risk are often more blurred and less clear cut than our previous comparison. With this in mind, it’s well worth speaking to a professional at your insurance company who will provide all the answers you need to get the best level of indemnity cover for your business at a fair and affordable price.

Whether you’re purchasing employers liability and public liability insurance for the first time or you’re simply looking for a little bit more information about the ins and outs of indemnity cover, we hope that this article has paved the way for a little bit of business insurance insight that will truly benefit your company. Always remember, failure to possess valid employers liability insurance could mean you’ll face fines of up to £2500 for each day you go without it.

There are also a number of different factors surrounding negligence and fault that can determine your levels of indemnity cover and the validation of the insurance when the time for a claim comes.