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How Much Cover You Should Take In A Third Party Liability Insurance

A third Party Liability Insurance is a Cover to protect you or your business from any claims made by a member of public for compensation due to a damage caused by your business to them or their property.

Also known as public liability cover, the amount you choose depends on the kind of business you operate and the coverage that your clients expect you to have. In addition to that, you should also consider the scale of work you perform along the compensation you may have to pay in the event of any unforeseen circumstances. Always remember that the compensation amount can go very high as it may incur a medical claim or a claim pertaining to loss of income.

In many cases, the amount of cover in a third party liability insurance you require is also mentioned in the policy contract. If you work on a government related contract, you would need to ensure a minimum amount of public liability cover as mentioned in the contract.

So while you are deciding the amount of your cover, it is important to keep the following point into consideration:

1. That you are buying insurance to cover you against a legal claim from third party

2. It is also necessary to get coverage for property and personal damage

Here are some factors to keep into consideration when deciding what cover you should take:

• Contractual obligations

If you are working on a contract basis, be sure to carefully check the insurance clauses to figure out the minimum amount of cover that you require.  While it is important to comply with this amount, you can definitely opt for a higher amount of claim.
• Level of compensation to be awarded

There are way many situations where the amount of compensation to be awarded has increased. So, your amount of cover in a public liability insurance should be wide enough to cover the compensation to be awarded to a third party. If not, you may have to shell out huge chunk of money from your own pocket or business funds, causing a huge loss for your operations.
• Coverage for any one incidence

The sum insured should be sufficient enough to help you cover the third party claims which may arise against you. This may vary from operation to operation.

It should also be remembered that the amount of cover insured remains unchanged throughout the tenure of policy, but compensation amount may keep varying with changing circumstances. Having said that, if an accident happens today, your third party liability cover will be the amount you are going to have today with you. But if for instance, the case takes years to settle, which usually happens, the court may ask you to pay a higher compensation and your policy may be of very little help to you. Hence, it is important, while you choose the cover, you make sure that the sum insured is enough to cover the compensation in future as well. Most of the policy providers however allow you to increase the amount of your cover during the tenure by paying an extra premium. 

This post first appeared on My Life In A Blog!, please read the originial post: here

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How Much Cover You Should Take In A Third Party Liability Insurance


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