What is the most common basis for calculating premiums for public liability and products liability insurance?

The most common basis for calculating premiums for public liability and products liability insurance is turnover. This approach considers the overall volume of business conducted, which is directly related to the exposure to risk. Higher turnover typically indicates more activities or transactions that could potentially lead to liability claims. As businesses grow and their turnover increases, the likelihood of encountering claims may also rise, making turnover a relevant metric for insurers to assess.

Using turnover as a basis for premium calculation allows insurers to better align premiums with the level of risk posed by the business's operations. In contrast, options like limit of indemnity, business value, and profit have their own uses in underwriting and risk assessment but do not capture the operational exposure as effectively as turnover does in the context of liability insurance. This makes turnover the preferred metric for calculating premiums in this insurance sector.