Why do you need it?
If you employ people, there is a chance that your employees may be injured at work, or that they, or your former employees, may become ill as a result of their work while in your employment. If this happens, your current or past employees might try to claim compensation from you if they believe you are responsible. If this is the case, an Employers Liability Insurance policy will help to meet the costs of the claim for compensation and defence costs.
Over the past decade there has been a huge increase in litigation and cases going to court with large settlements left to pay. Businesses have sustained substantial losses arising from their responsibilities in respect of the health and safety of their employees while they are at work and Employers Liability can help cover these costs if a claim were to be made against you.
Employers Liability Insurance became a legal requirement in 1972 as a direct result of the 1969 Employers Liability Act.
Who is an employee?
An employee is anybody you have on your premises who is assisting you in your work. It may be on a part-time or full time basis, students on work experience courses, a self- employed sub-contractor, a person working probation or even voluntary workers. They are all technically employed by you, because they are under your instruction and working on your premises.
You may be exempt from having employers liability insurance if you are the owner and sole employee, or where all your business’ employees are close relatives and the business itself is not incorporated as a limited company.
What cover does Employers Liability Provide?
A typical Employers Liability Insurance policy will cover you for claims made against you if an employee is killed, injured or contracts an illness or disease whilst working for you in connection with your business.
It also covers you for the costs and legal expenses for the claimant as well as your legal costs. You will also be covered for costs and expenses you may have in the defence of a prosecution relating to the welfare of employees under the Health and Safety at Work Act 1974.
How much cover will I need?
If you employ people I the UK, by law, you must be insured for at least £5 million and in practice most insurers offer cover of at least £10 million. You should look carefully at the risks and liabilities that your business faces and consider how much cover you need. If you have employees in other countries, you will need to find out the laws regarding Employees there.
If you are part of a group of companies, a policy for Employers’ Liability Insurance can be taken out for the group as a whole. In this case, the entire group, including subsidiary companies, must have cover of at least £5 million.
You can have more than one policy for Employers’ Liability Insurance, but the total value of the cover provided by the policies must be at least £5 million. You should take into consideration that £5 million worth of cover is the minimum required and has to cover legal costs and compensation if you were to lose the case. A greater amount of cover should be considered if more than one employee could be injured at the same time.
When taking out a policy, your insurer will give you a certificate of Employers’ Liability Insurance. This must state clearly the minimum level of cover provided and the companies covered by the policy. You must display a copy of the certificate of insurance where your employees can easily read it. This is the case when you renew your policy also.