Worked Quotes and Buying Checklists
How to compare business liability insurance quotes: a worked example in rupees
A step-by-step comparison of three CGL quotes for an Indian business, adjusting for limits, deductibles, defence costs, extensions and GST, with every calculation shown.
To compare business liability quotes fairly, first make them describe the same risk (activities, turnover, premises, territory), then compare four things: the total premium including GST and the cost of extensions you need, what each quote would pay on a realistic claim after the deductible and limit, whether defence costs sit inside the limit, and the wording differences (trigger, retroactive date, exclusions, sub-limits). The quote with the lowest premium regularly turns out to be the most expensive once a single serious claim is tested. The example below walks through each step with illustrative figures.
This guide is part of the liability insurance buying checklist. For the two biggest variables in any quote, see choosing the limit of indemnity and choosing a deductible.
The business
A packaging manufacturer in Gujarat (illustrative):
- Turnover ₹12 crore, of which ₹1.5 crore is exported to the Gulf
- One factory, 60 employees, ESI-covered except 8 supervisors and managers
- Supplies corrugated boxes to food companies; staff sometimes install packaging machinery lines at clients
- A key food client's contract requires CGL of at least ₹1 crore per occurrence, the client named as additional insured, and waiver of subrogation
Step 1: the quotes as received
| Feature | Quote A | Quote B | Quote C |
|---|---|---|---|
| Policy | Industrial public liability | CGL | CGL |
| Limit AOA / AOY | ₹1 crore / ₹1 crore | ₹1 crore / ₹2 crore | ₹2 crore / ₹2 crore |
| Deductible | ₹25,000 | ₹50,000 | ₹1,00,000 |
| Products and completed operations | Excluded | Included | Included |
| Territory | India | Worldwide excl. USA/Canada | India only |
| Defence costs | Inside limit | In addition to limit | Inside limit |
| Additional insured and waiver of subrogation | Not offered | Included | ₹4,000 extra |
| Premium before GST | ₹38,000 | ₹62,000 | ₹55,000 |
On headline premium the order is A, C, B.
Step 2: remove quotes that cannot meet the requirements
- Quote A excludes products and completed operations, and cannot add the client as additional insured. It fails the contract and leaves the main exposure, products sold to food companies, uninsured. Out.
- Quote C is India-only, but ₹1.5 crore of turnover is exported. Ask the insurer to requote with Gulf exports included. Suppose the revised premium is ₹61,000 before GST, plus ₹4,000 for the contract extensions.
Step 3: put the remaining quotes on the same footing
| Quote B | Quote C (revised) | |
|---|---|---|
| Base premium | ₹62,000 | ₹61,000 |
| Contract extensions | Included | ₹4,000 |
| Base premium with extensions | ₹62,000 | ₹65,000 |
| GST at 18% | ₹11,160 | ₹11,700 |
| Total payable | ₹73,160 | ₹76,700 |
After adjustments, B is now ₹3,540 cheaper than C, despite the higher original premium.
Step 4: test realistic claims
Scenario 1: a moderate claim
A box collapses on a client's line, injuring a worker and damaging a conveyor. Compensation ₹14 lakh, defence costs ₹2 lakh.
- B: defence costs paid in addition. Compensation paid = ₹14,00,000 − ₹50,000 = ₹13,50,000. Business pays ₹50,000. Premium + share = ₹73,160 + ₹50,000 = ₹1,23,160
- C: claim inside limit = ₹16,00,000. Paid = ₹16,00,000 − ₹1,00,000 = ₹15,00,000. Business pays ₹1,00,000. Total = ₹1,76,700
Scenario 2: a severe claim
Contaminated packaging leads to a food recall and illness claims. Third-party injury and property compensation ₹1.9 crore, defence costs ₹25 lakh. (The client's recall costs would usually be excluded under both quotes.)
- B: limit ₹1 crore per occurrence for compensation, defence costs in addition. Compensation paid = min(₹1.9 crore − ₹50,000, ₹1 crore) = ₹1 crore. Defence ₹25 lakh paid in addition. Business pays ₹1.9 crore − ₹1 crore = ₹90 lakh. Total = ₹73,160 + ₹90,00,000 = ₹90,73,160
- C: limit ₹2 crore inside which defence costs sit. Total claim ₹2.15 crore. Paid = min(₹2.15 crore − ₹1 lakh, ₹2 crore) = ₹2 crore. Business pays ₹15 lakh. Total = ₹76,700 + ₹15,00,000 = ₹15,76,700
What the scenarios show
| No claim | Moderate claim | Severe claim | |
|---|---|---|---|
| Quote B | ₹73,160 | ₹1,23,160 | ₹90,73,160 |
| Quote C (revised) | ₹76,700 | ₹1,76,700 | ₹15,76,700 |
B is cheaper in the common cases; C protects far better in a catastrophe. A third option is to ask insurer B for a ₹2 crore limit and see the extra cost. If B quotes, say, ₹14,000 more before GST, the total becomes ₹73,160 + ₹16,520 = ₹89,680, with defence costs still outside the limit. That would likely be the best of all three on these numbers.
Enter your own figures in the liability quote comparison tool. Because it treats the claim as one figure, enter compensation only for a quote that pays defence costs in addition, and compensation plus defence for a quote where they sit inside the limit.
Step 5: compare the small print
| Term | Why it matters here |
|---|---|
| Sudden and accidental pollution | Spillage of inks or adhesives at a client site |
| Vendor's liability | Food clients who sell products in your packaging may ask to be covered |
| Sub-limit for products | Some CGL wordings cap products below the main limit |
| Contractual liability | Indemnities in the client contract beyond what the law imposes |
| Claims notification | Time limits and the person to notify |
| Adjustment clause | Extra premium if turnover exceeds the estimate |
Step 6: remember the other covers
The 8 supervisors and managers outside ESI need employees' compensation cover. If the factory stores any notified hazardous substance above the threshold, a PLI Act policy is needed too.
Frequently asked questions
Should I always buy the highest limit offered?
No, but test a severe scenario before deciding. Higher limits usually cost proportionally less per lakh, as the limit guide shows.
Can I ask an insurer to match another quote?
You can share your requirements and ask for their best terms. Do not share another insurer's confidential documents without permission.
Why does defence cost treatment matter so much?
In a serious case, legal costs can be a large fraction of the award. If they sit inside the limit, they reduce what is left for compensation.
Are recall costs covered by CGL?
Generally no. Ask separately about product recall cover if your products could need withdrawing.
Sources
- IRDAI — registered insurers and brokers
- India Code — Consumer Protection Act, 2019 product liability provisions
- CBIC GST portal — GST on insurance premiums
