Employers’ Liability Insurance
The majority of companies are required by law to have liability insurance to protect themselves in an employee accident or sickness caused by their work.
This article’s goal is to make sure you know exactly what’s expected of you.
This is not a legal interpretation of the Employers’ Liability (Compulsory Insurance) Act. Only the courts have the authority to interpret the law, so be mindful of that.
What is Employers’ Liability Insurance?
A company’s first responsibility is the health and safety of the people who work there. During their time working for you, workers can get sick or injured on the job. If they think you’re to blame, they may sue you for damages.
If any of your employees gets hurt or becomes ill while at work, employers’ liability insurance will pay for their medical bills and lost wages.
Is it Essential For Me to Have Employers’ Liability Insurance?
Employers’ liability insurance is required for companies to have by law if you are a business owner or manager. Every day you go without enough insurance may cost you up to £2,500 in fines.
It is a good idea to double-check with your insurer to discover precisely what is covered by your policy regarding compensation and legal expenses.
Businesses that don’t have to pay the insurance
Employers’ liability insurance is not needed by law for certain companies, such as:
- Companies with no employees
- Family-owned enterprises with staff made up solely of relatives
The Employers’ Liability (Compulsory Insurance) Act of 1969 mandates that you have a minimum level of insurance protection against such claims if you are in business in the UK. In the event of any short term or long term illness or accident involving one of your workers, you’ll be covered by your employer’s liability insurance. However, suppose your workers are injured in a car accident while working for you. In that case, your motor insurance should be able to cover any of the costs of their medical bills independently.
Liability insurance for the general public is something else entirely. However, it does not provide coverage for lawsuits brought against you by customers or other companies. Employers’ liability insurance is required by law, even if public liability insurance is often optional.
If you don’t have current employers’ liability insurance that conforms with the law, you risk a hefty punishment.
What if my workers work overseas or my firm has its headquarters in another country?
Do I require employers’ liability insurance? Employers’ liability insurance is required if any of your workers are regularly located in England, Scotland, or Wales (including offshore installations or connected buildings). Employers’ liability insurance is not required by British law to cover any of your workers outside the country (e.g. if they are on secondment).
To ensure you are compliant, you should look into whether or not you’re required by law to get insurance or take any other steps to safeguard your workers. In Great Britain, laws require employers’ liability insurance for personnel who spend more than seven days on an offshore site but are ordinarily located elsewhere.
Why is Employers’ Liability Insurance Important?
A licensed insurer is required. Failing to comply could result in legal consequences. Before purchasing employers’ liability insurance, make sure your insurer is licensed. Financial Services and Markets Act 2000 manages the activities of authorised insurers, which may be either individuals or corporations. The Financial Services Authority (FSA) has compiled a record to keep track of all licensed insurers. Search the FSA’s registry at www.fsa.gov.uk to see whether a firm is authorised, or call the FSA directly at 0845 606 1234.
Can conditions be included in my insurance policy?
If you get employers’ liability insurance, you and your insurer will agree on how much compensation will be paid. For example, the insurance will provide coverage for your company’s unique operations. Conditions that might limit how much your insurance has to pay are ones that neither you nor your insurer can agree to impose.
Insurers can’t deny claims for failure to provide reasonable protection for their employees against injury or disease just because the business hasn’t kept certain records or can’t provide the insurer with information from those records.
They can also deny claims if the business has done something the insurer told them not to do (such as admitting fault). Even so, this does not release you of your legal obligations to ensure the health and safety of your workers at all costs. You must, for example, do a thorough risk assessment and take all reasonably reasonable steps to safeguard your personnel and report any events.
Insurance companies have the legal right to sue policyholders who fail to satisfy their legal duties for the health and safety of any of your workers, which results in a claim.
Is it possible that the insurance company may want a portion of any compensation claim to be paid by me?
Any compensation agreed upon or granted by a court to your employee, or former employee must be paid in full by your insurance. Your insurer may impose no restrictions that force you, your employee, or a former employee to foot a portion of the bill for any claim. Instead of paying the whole compensation amount, you might agree with your insurance and agree to pay back a portion of it.
How Much Insurance Do I Require?
A minimum of £5 million in insurance coverage is required. You should, however, carefully assess your risks and responsibilities to see whether you need coverage of at least £5 million in insurance.
In practice, most insurance firms give coverage up to a maximum of £10 million. If your company is a member of a trade association, you may obtain employer liability insurance for the whole organisation. In this circumstance, the whole group, including subsidiary firms, must have a minimum of £5 million in insurance coverage on their own. Employers’ liability insurance policies may be carried in the names of many different companies. On the other hand, the insurance must provide coverage worth at least £5 million in total. It’s important to remember that the £5 million minimum insurance coverage covers expenses, so you may wish to get additional coverage. Read more about liability insurance here.
Other useful links about business insurance:
Insurance for Sole Traders
What is Shop Insurance?
Hire and Reward Insurance
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