US companies have reduced liability cover by an average of 9.4%, according to a study by insurance company Marsh.
The cost of liability insurance increased by an average of 63.4% in the 12-month period ending January 2003, reports the Limits of Liability study.
The small firms amongst the 4,329 companies surveyed for the study accounted for the sharpest decline with the value of cover purchased falling by 17.8%.
The exceptions to the trend in declining liability insurance were large firms and US companies which had suffered losses of more than $5m in the last five years.
Timothy P. Brady, a managing director at Marsh's National Casualty Practice, said: "Firms that have sustained large liability losses perhaps recognise they're vulnerable to a significant claim and will pay the additional premium now required to maintain their level of protection."
