Book an appointment here

Public Liability

Get the right advice from insurance professionals

Or speak to a broker 0800 374 691


How do you calculate public liablity insurance?

Public Liability Calculation

Public liability insurance is calculated based on various factors including the nature of your business, its size, the amount of interaction with the public, and your claims history. Insurance companies evaluate these aspects to assess the level of risk associated with your business, which ultimately determines the cost of your public liability insurance premium.

How is it calculated?

Calculating public liability insurance involves assessing several aspects of your business:

Business Type

Different businesses carry different levels of risk. A construction company would have a higher public liability insurance premium than a small retail store due to the increased chances of accidents occurring on a construction site.

Business Size and Turnover

Larger businesses with higher turnovers tend to have more interactions with the public, which can increase the risk of accidents happening. Consequently, they may have higher insurance premiums.


Businesses located in busy, densely populated areas might face higher premiums due to the increased risk of interaction with the public.

Claims History

A history of previous claims can increase your insurance premium as it suggests a higher risk to the insurer.

Level of Cover

The amount of cover you choose will affect your premium. More comprehensive cover will generally result in a higher premium.


The number of employees and their interaction with the public can impact the cost. More employees interacting with the public can increase the risk, and hence, the premium.

Contractual Requirements

Some contracts may require a specific level of public liability insurance, influencing the amount of cover you need and your premium.

Why is Public Liability Calculated This Way?

The methodology behind the calculation is designed for:

  • Fairness: Ensuring that businesses pay premiums proportional to their actual risks.
  • Precision: Giving a clear idea to businesses about what they’re covered for.
  • Protection: Ensuring that the insurance company remains solvent and can pay out claims when required.

What Factors are Often Overlooked in Calculations?

When discussing public liability calculations, certain factors may be overlooked, but are crucial:

  • Updates in Business Operations: Expansion, venturing into new areas, or even decreasing the scope can impact the risk and therefore the premium.
  • Equipment Updates: Newly purchased, high-value equipment can increase liability.
  • Training & Safety Protocols: Often, businesses with robust training and safety measures can negotiate for better rates.

Disadvantages/Advantages or Pros/Cons

  • Tailored Coverage: Ensures businesses only pay for the coverage they need.
  • Financial Security: Proper calculation reduces the chances of under-insurance, ensuring businesses are not left financially vulnerable.
  • Encourages Safety: Businesses can actively reduce their premiums by adopting safety measures and protocols.
  • Can Be Costly: If perceived as high-risk, premiums can be significantly high.
  • Complexity: The calculation process can be intricate and confusing for some.
  • Periodic Reassessment: As business grows or changes, the reassessment can change premiums unexpectedly.

Common Misunderstandings

Some common misunderstandings about public liability:

  1. “All Businesses Pay the Same”: Each business is unique and has its own set of risks.
  2. “Once Calculated, It Remains Constant”: Premiums can change based on business growth, claim history, and other variables.
  3. “Low Premiums Mean Lower Coverage”: Not necessarily. It might mean that the business is perceived as less risky.

How Can Gerrards Help?

At Gerrards, a specialized insurance broker in New Zealand:

  • Tailored Advice: We guide businesses to understand their unique risks and recommend appropriate coverage.
  • Annual Review: Our team ensures regular reassessment to reflect current business status.
  • Claims Assistance: With a rich history in business insurance, we provide unparalleled support during the claims process.

What our clients are saying