As an employer, you are responsible for your employees’ health and safety while at work. You are required to take all reasonable measures to ensure that they are protected from harm. However, accidents might still happen, so employer liability insurance may come in handy.
Any of your employees may sustain an injury at work. Alternatively, your current or former employees may develop illnesses because of their work activities. If they consider you responsible for this, they might claim compensation from you. Depending on the nature and seriousness of the injury, the cost of these claims can be very high.
Employer liability insurance explained
With a few exceptions, most employers are compelled by law to take out an employer liability insurance cover. This is stipulated in the Employer’s Liability (Compulsory Insurance) Act of 1969.
The insurance protects both you and your employees. Your employees enjoy protection should they incur any injuries or illnesses as a result of your employ. You on the other hand, are protected against financial ruin owing to lawsuits and claims made against you due to these workplace injuries.
The employer liability insurance mainly protects your business assets and ensures that you have enough funds to pay compensation to any of your employees who might win a claim against you.
What does the employer liability insurance cover?
This type of insurance will cover an employee’s medical fees for injuries sustained in a work-related accident. In most cases, this will include costs related to personal injury, disability coverage, compensation for lost wages, support payments to dependants as well as funeral expenses.
Employer liability insurance also covers legal fees such as defence expenses and settlements for workplace claims filed by your employees. Your company might have to pay these fees whether or not you win the lawsuits. Any costs arising from third party property damage might also be covered by the insurance.
The employer liability insurance does not cover claims made against you by the public.
How much cover do you need?
The Employer’s Liability Act stipulates that a company has to be insured for at least five million pounds. However, it is advisable to scrutinize all your liabilities and risks to determine whether you need a larger insurance cover.
Your insurance company might take several factors into consideration when determining the premiums to be paid for your employer liability insurance policy. These include:
- The number of employees to be covered.
- The size of your business.
- The hazards of the work involved.
Is your company exempt from having employer liability insurance?
If you have one or more people working for you under a contract of service or apprenticeship, it is compulsory to take out an employer liability insurance cover. The only businesses not required to have this insurance include the following:
- Family businesses where all employees are your close relatives. This does not apply if the business is incorporated as a limited company.
- Businesses where the owner is the sole employee and controls 50% or more of the company’s issued share capital.
In order to learn more about employer liability insurance, contact us at the Accident Advice Helpline on 0800 689 0500.