What is a Per-Capita Liability Insurance Policy
There are many different policy types for liability insurance; for sole traders and small businesses in the contracting sector, a Per-Capita Liability insurance policy could be a perfect fit for you.
Wherever and whenever you come into contact with members of the public, there is the risk of causing loss, damage, or injury. Having insurance cover in place, your insurer will defend you against claims and pay compensation should you have been found negligent.
Should an employee become ill or injured whilst carrying out work for you, a Per-Capita Liability Insurance policy such as this will also provide cover and defence to your business; this is called Employers Liability and is a legal requirement when you have people working for you.
What is different about a Per-Capita Liability policy?
Per-Capita quite simply means the number of people. The policy provides coverage based on the number of employees you have and is rated accordingly.
For a sole trader with no employees, the policy will cover just Public Liability Insurance, where you have people carrying out work for you; the policy will then extend to include Employers Liability – they are pretty simple, straightforward insurance policies, and are competitively priced, for some trades premiums can be less than £50.00
How does a Per-Capita policy work?
A Per-Capita policy allows you flexibility; for example, as you add employees to your business, you will pay for the number you have. The policy provides cover for any loss, damage, or injury that your employee may do to a member of the public whilst working for you. It will also offer Employers Liability Insurance should your employee claim you.
It is essential to ensure that you have the correct number of employees covered; these should include PAYE Employees, Self Employed people, Labour Only Sub-Contractors, Work Experience, and Volunteers.
To get the correct number of people who work for you, it’s easier to ask yourself; it shouldn’t be how many employees you have but how many people work for me.
Are Bona Fide Subcontractors covered under the policy?
These types of sub-contractors should have their own insurance, be responsible for their own Health & Safety, etc., and have their own employers’ liability; they are not employees, your policy is providing Public Liability contingency cover.
Usually, a Per-Capita Insurance Policy will only provide cover where your turnover doesn’t extend beyond a certain percentage, usually 15%, but this can differ.
Is it cost-effective to have a cover on this basis?
Not always, many factors go into obtaining the correct type of insurance; a per-capita liability policy can be ideal and cost-effective; it’s important to note, however, that once your business reaches a specific size or number of employees, there are alternatives that could be better suited to you and your business. These are usually rated on your turnover and wage payments, so it’s worth discussing options with your insurance broker to get the best route for your business.
At Real Insurance, we specialise in the construction sector; a Per-Capita policy is ideal for small contractors but speak to us about your requirements.
How many employees will a policy allow?
These policies have evolved over many years; initially designed for the smaller contracting trades such as builders, plasterers, and plumbers, they are now available for hundreds of different professions, from scaffolders and management consultants to trainers.
The original policies catered for just a few employees, evolving from five to ten and now up to 20; whether they are competitive at 20 is a different thing and should be discussed with your broker to ascertain suitability.
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