The activity assessment sketched the picture – the needs assessment turns it into a concrete cover plan: how large a limit, what deductible, what structure, with which extensions. This translation work is the essence of the profession: it's what decides whether the policy is sized to reality, or just to a rate table. This article walks through that reasoning.
- Sizing runs in one direction: from risk to a number – not backwards from the premium.
- Four main decisions: limit, deductible, structure (one pillar or more), and the set of extensions.
- External minimums (chamber, client) are floors – sizing builds on top of them, not around them.
The limit decision: the worst realistic claim
The first question is always the same: what's the worst, reasonably foreseeable claim your activity could cause? Not an average week, but the bad day: the chain of loss running its full course (how many flats a leak could reach), the possibility of personal injury (do you work around people), the largest client's largest possible loss (a large fine for the accountant's largest client). This scenario is what a limit requirement is built from – for the detailed considerations, see the limit article. External minimums (chamber, tender, client) are fitted afterward: they're floors, not the method (the minimum-limit article).
The deductible decision: the reserve question
The second decision looks inward: how large a loss can the business absorb without trouble? This sets your deductible range – a business working with a stable reserve can typically secure a better premium with a higher deductible; one with tight cash flow is safer with a low one (deductible logic). The deductible decision is the limit decision's counterpart: together they map out how much risk stays with you at the bottom, and how much protection stands behind you at the top.
The structure decision: pillars and modules
The third question: how many pillars do you need? A purely hands-on profile needs public liability cover, a purely knowledge-based profile needs professional indemnity, and a mixed profile typically needs both, coordinated together (article). The set of extensions builds on top of this: rented premises, items being worked on, subcontractors, work abroad – only what actually follows from the assessment (extensions). For the professional-indemnity pillar, planning the time dimension belongs here too: the retroactive date, continuity (the key article).
The outcome: a quote-request specification
The product of the needs assessment is a clean specification: this is what I take to insurers, and this is what comparable quotes come back against (the comparison article). A good specification is half of running a competitive process: if everyone prices against the same thing, the table genuinely compares. The first step in the process is a conversation: free consultation – to prepare for it: the data list.
Example: a specification takes shape
An electrician's assessment produced this picture: work in apartment buildings and offices, two employees, an occasional subcontractor, a rented workshop, no design work. The specification almost writes itself from there: public liability cover for the electrical work, with a limit sized to the largest work environment (office-building scale); employees covered, with an employer's-liability element added; a subcontractor extension for occasional engagements; a tenant module for the workshop; the question of items-being-worked-on clarified; no professional-indemnity pillar needed (no design work) – which saves on premium. Six lines, and every insurer prices against the same thing. The specification isn't bureaucracy – it's the translation that makes quotes comparable, and cover that fits reality.
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