The Public Liability Insurance Blog

The employers' liability guide

Alongside public liability insurance, employers’ liability is one of the core policies that businesses need to have in place. Employment law and employees rights are some of the more litigious areas of our legal system and as a result, there are some strict rules as to what cover you need to have in place depending on the size and nature of your company.

Employees If this has started ringing alarm bells for you, you have the option of calling one of our advisers at YOUR Insurance to talk things through right now. They will very quickly be able to tell you if you need the cover or not . If you’re looking for a little more information however, let’s take a look at the elements of employers’ liability in a little more depth.

What exactly is employers’ liability?

Employers’ liability basically protects your business from your employees, and yes that does sound a little harsh and unfriendly.

This covers claims made against you as a result of the following:

  • Employees injured whilst working for you
  • Former employees who believe they have become ill as a result of working for you

Common claims can involve injuries as a result of health and safety snafus that catch your employees out but can also include illnesses that employees are diagnosed with many years after they work for you. If an employee feels that it was working for you that caused their condition, they might come after you with a lawsuit.

Some policies also cover legal fees or medical fees that might be incurred as a result of one of these incidents, but this is not included as standard.

Who is employers’ liability for?

If you employ someone, chances are you need employers’ liability, and that’s not ‘need’ in the sense of ‘we would like to sell you some insurance please so we’re going to tell you that you need it’ but ‘need’ in the sense that you could be fined £1,000 for every day you don’t have it in place.

A minimum of £5 million of employers’ liability cover is required by law if:

  • You are a limited company
  • You employ anyone that isn’t an immediate family member

Public liabilityIt’s even required if you have people working for you that you aren’t paying. You essentially have a responsibility from a health and safety point of view to everyone that is doing any work for you, whether they are full time, part-time, sub-contractors, work experience students, or volunteers.

The only instances where you don’t legally need the cover are if all of your employees are close relatives and the business is not incorporated as a limited company, or if the company owner is the only employee and owns at least 50% of the companies issued share capital.

It’s an understandable reaction as a small business to not want to spend any money that you don’t absolutely have to, so if you’re unsure about whether you need to have the cover or not, it is best to call an advisor (maybe one of YOUR Insurance’s team of experts for example) and double check.

Again, £1,000 a day for not having it in place. Nobody wants to pay that and very few small businesses can afford to just write that sort of expense off.

Basic Elements of employers’ liability

  • Amount covered:

The minimum amount of cover required by law is £5 million. Depending on you specific business needs or the nature of the work you do however, you may need more than this in place. Not having adequate cover in place is also a legal issue and could equally result in a fine, so make sure you double check what your cover gives you.

  • Profession specific extras:

We sell employers’ liability as part of a larger package, normally with public liability insurance. You can also take up any number of additional extras that you might find useful to your particular trade. If there’s something specific that you’re looking for and you can’t find it online, our advisors will probably be able to find it for you in the wider insurance market.

What affects your premium?

Your premiums will be affected by the nature of the work that your business is involved in. Whereas a call centre may have fairly low risks arising from basic health and safety issues like tripping hazards, a workshop that performs a lot of welding would have much higher risks due to the more dangerous nature of the work.

Generally speaking, the more risk and danger, the higher your premiums will be. It could also make it harder to find quotes through comparison sites, but this does not necessarily mean you won’t be able to get covered so it is worth talking to our team of experts to get further advice.

If you work in a particularly unusual or risky business, like training lions to juggle with flaming torches, then you will definitely struggle to find insurance but there will still be a specialist insurer that you can turn to. In these cases, we might not be able to help you set up the policy, but we should be able to point you in the right direction.

Pitfalls

It’s very easy to not think about employers’ liability. When you’re building a business from scratch, there are many different things competing for your attention and it’s easy for something like this to slip through the cracks. Some people completely forget about it when it comes to employing their first members of staff for example and some people just don’t realise they need it.

As well as not setting it up in the first place, many people forget to update their policy as their company grows in size. As mentioned above, sometimes having too little cover in place can result in a fine, so as your company expands, remember to periodically review your policies.

It is also strongly recommended that you keep detailed records of your employers’ liability over the years as there is a potential for claims relating to illnesses or injuries to be made years, even decades, after you employ someone. You may need to prove that you had cover in place during the time someone claims they developed a long term illness or injury whilst working for you.

Summary

Unless you fall into one of those unusual exceptions, you need to have employers’ liability in place. More importantly, you need to have the right amount of public liability and an appropriate policy by law.

Although it can be difficult to imagine some of the scenarios that it covers if you have particularly pleasant employees or are a highly responsible and careful employer, understanding why this insurance is required by law doesn’t require too much thought. It doesn’t matter how careful or diligent you are, some things are beyond your control and your employees will eventually have accidents which they might blame you for. Even if it isn’t your fault and you’ve done everything that you need to do, employers’ liability cover just acts as a safety net for you.

Having this cover in place gives you just one less thing to worry about.

YOUR Insurance specialises in public liability insurance packages for small and medium sized businesses involved in many different trades and professions. You can compare quotes for your business online, or call one of our advisors on 0800 107 8949.