What is Employers' Liability Insurance?
Whether you have a small team of employees or an expanding workforce, it is your responsibility as an employer to protect the health and well-being of your staff.
One of the ways you can do this is by having employers’ liability insurance in place to comply with legislative requirements.
If your company is found to be legally liable for an injury or illness suffered by an employee during their work, employers' liability insurance will cover the cost of any compensation claimed. The cover also includes any legal costs if you chose to defend your company’s position, as well as the costs and expenses incurred by the injured employee should you be found legally liable.
What does employers’ liability insurance cover?
If an employee becomes ill or gets injured as a result of their work, they could seek damages. The resulting legal costs could run into the tens of thousands of pounds and as their employer you could be liable if you don’t have sufficient insurance in place.
By meeting your legal requirements and taking out employers’ liability insurance, you ensure that you and your business are protected should the worst happen. That is because your policy could pay for defence costs in defending a claim even if it has not yet been substantiated as well as any compensation awarded by the court.
Imagine a scenario where an employee injures herself by slipping on a wet floor while at work. If she decides to pursue legal action, employers’ liability insurance could cover the claimant’s medical costs, loss of income and any other damages that the court deems necessary.
Who needs Employers’ Liability Insurance?
Businesses are required by law to have employers’ liability insurance for people who they employ under a contract of service – which can be spoken, written, or implied.
What’s more, you could be fined up to £2,500 a day until you take out an appropriate policy. Additionally, if you do not display your employers’ liability certificate, you could be fined £1,000.
But there are exceptions to the Employers’ Liability (Compulsory Insurance) Act 1969: employers are exempt if they only employ family members. However, even if your business does not employ anyone outside of your family, if you have incorporated into a limited company then you will still need cover regardless. In addition, limited companies that are run by a sole director who also owns 50% or more of the issued share capital in the company are not required by law to have employers’ liability insurance. Even though your business may be exempt from the legislation, we do recommend that you consider purchasing Employers Liability Insurance
How much cover will I need?
Companies must arrange cover for at least £5 million. This is referred to as the “Limit of Indemnity” (this is the maximum amount an insurer will pay out for any one claim usually within the policy year). Most Insurers automatically offer a £10,000,000 limit.
What risks would I be exposed to if I don’t have Employers’ Liability Insurance?
You may well be in breach of legislation. The Health and Safety Executive (HSE) enforces the law on Employers' Liability insurance and can impose fines as mentioned above. HSE inspectors can check that you have it by asking to see your certificate of employers' liability insurance and other insurance details. In the event of an employee suffering an accident at work you would still be liable to compensate the employee if you have been negligent.
How much does Employers’ Liability Insurance cost?
The cost of employers’ liability cover varies from business to business. It is dependent on several factors, which may include the number of workers you employ, the type of work undertaken, wageroll, claims experience and and your business activities.
Employers’ liability insurance is usually included as a cover type within a business insurance package policy. To find out more about employers’ liability insurance compare quotes online. Alternatively, give us a call today and speak to a member of our team.