Liability insurance isn't simply a yes-or-no question: the limit of indemnity decides how much it's actually worth. The limit is the upper ceiling of the insurer's payout – if the claim exceeds it, the difference stays with the business. This article walks through the sizing considerations; it deliberately avoids figures, because the right limit depends on your activity and situation.
- The limit is typically set both per claim event and per insurance year – both matter.
- Sizing should be based not on the premium, but on the worst realistic claim: how large a claim could actually hit the business?
- Inner limits – internal caps on specific types of claim – can matter even more than the main limit.
Where Does Sizing Start?
From three questions. First: what value of assets do you work around? For those working in listed buildings, industrial halls, or near expensive machinery, even a single property claim can be significant. Second: is personal injury conceivable? Personal-injury claims – damages, a grievance award (sérelemdíj), or periodic payments – can dwarf property claims by orders of magnitude; wherever people move through the work site, this becomes a sizing factor. Third: what chains of loss could be triggered? A water leak doesn't stop at one flat, and a software bug doesn't stop at one user – you need to look at the end of the chain, not the start.
Per-Event and Annual Limit
Policy terms typically set a dual limit: one for each claim event and one for the insurance year as a whole. The ratio between the two is itself a decision: if the annual limit is only twice the per-event limit, two larger claims could exhaust cover for the rest of the year. With several parallel projects or a large client base, the annual ceiling deserves just as much attention.
Inner Limits: The Internal Caps
Policy terms may set a lower internal cap – below the main limit – for certain types of claim, such as damage to rented premises, damage to items being worked on, or pure financial loss. These inner limits often sit exactly where the business's real risk lies: pure financial loss for an accountant, the item being worked on for a tradesperson. When comparing quotes, it's worth lining up the inner-limit rows side by side – which is exactly what the comparison checklist does.
When Is the Limit Not Enough?
In the interest of honesty: some claims do turn out to exceed the limit. That's why sizing isn't a one-off decision but ongoing maintenance – it should be reassessed with revenue growth, a new client base, or larger projects (see the annual-review routine). Client and chamber minimum requirements only set a floor, not a proper sizing method – that's covered in the minimum-limit article. The limit's counterpart is the deductible: together they define the real shape of your cover – continue with the deductible logic article, or assess your own situation at a free consultation.
Example: Following the Chain Through
Replacing a riser pipe in an apartment building is a good illustration. The bad scenario isn't that a joint fails – it's that it fails at night, on the eighth floor: by the time anyone notices in the morning, five flats have been flooded, including one recently renovated. The claim items: restoration in five flats, repainting, drying out, costs of rehousing residents, and a built-in piece of furniture of disputed value. That's the chain logic: the triggering fault is small, but the final total depends on the value of everything around it. When sizing a limit, this is the chain to work through – not the worst theoretical catastrophe, but the worst realistic one. The right limit sits between the two: what the premium can still bear, and what still covers the chain.
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