When it comes to working out premiums for public & employer’s liability, insurers can use a number of rating factors. The most common are per capita (per person) rated and wage roll and turnover rated.
Per Capita Rating
This method is most suitable for smaller businesses. The insurers look at the trade and the number of people carrying out manual work. Insurers will look at the total number of direct manual employees and labour only sub-contractors and which public liability indemnity is chosen.
The pros of per capita rating are that the premium are generally cheaper than wage roll and turnover rated policies. The cons are that if you increase the number of people who carry out manual work, the premium increases. If you have more than 5 manual workers it is generally better to have a wage and turnover rated policy. Insurers do not usually charge for bona-fide sub-contractors provided that payment to this type of contractor does not exceed 25% of turnover.
Wage & Turnover Rated Policies
Insurers will look at the type of trade, the public liability indemnity limit and also the wage roll and turnover. Insurers charge different rates for different types of manual work. For example, the rate for a driver is likely to be less than a construction worker.
Once the insurers have the estimated figures for wages and turnover they will normally charge a minimum and deposit premium based on the estimates. Prior to the renewal of the policy the insurers will ask for a declaration of the actual figures and adjust the premium accordingly. If wages and turnover have increased or if they have been under-estimated this can result in an additional premium being payable.
The pro of this type of policy is that the insurance is more flexible and not limited to a certain number of employees, the cons are that premiums are generally more expensive.
As a broker, it is our job to source the best options for your business. We have access to a number of insurers that will work on a wage roll and turnover basis but do not ask for an end of year declaration. Although their initial premiums might be a bit more, if a business is looking to expand, there could be a considerable saving if a declaration is not required.