The importance of having sufficient liability coverage has never been greater for businesses. Even relatively small incidents can exceed standard indemnity limits and result in large claims that can have a catastrophic impact on a company’s balance sheet and reputation. Consequently, there is a growing demand for higher limits of insurance. Here are five reasons brokers should consider Excess of Loss coverage for their clients.
1. Larger personal injury claims
With advances in medical science, longer life expectancies and increasing care costs, the likelihood of individual claims exceeding $10M is at an all-time high.
2. Changing contractual demands
Companies that carry out work for local authorities, property owners or main contractors are often contractually required to hold $5M+ indemnity limits. Excess of Loss enables businesses to increase their coverage with an annual policy or on a project-specific basis.
3. Multiple injuries from a single event
Companies with large numbers of employees or visitors in the same building face the possibility of a single event causing injuries to multiple people. The resulting claims can quickly accumulate to exceed traditional primary limits.
4. Third-party property values
Many of the largest public liability claims result from fires caused by companies using heat at third-party sites. It’s essential to ensure that public liability indemnity limits cover damage to third-party property as well as any business interruption suffered by the customer.
5. Critical product exposures
It can be difficult to quantify the claim potential of a product, especially when that product is a component. Brokers and their clients need to consider the end usage of their products, the potential for product failure to result in injury or damage, and whether there are exports to the United States, where claim values can be much higher.
A blog created for Canada. Reference: Justin Godman
Taking it to excess. [Blog Post].