Employers' Liability Insurance - a small business guide
Apart from motor risks, Employers’ Liability is the only other major form of liability insurance which is compulsory. If you don’t have Employers’ Liability Insurance, you face the prospect of paying a fine of up to £2,500 for every day you have traded without it. By law, employers must have Employers’ Liability Insurance and be insured for at least £5 million. Most insurers automatically provide cover of at least £10 million.
Employers’ Liability Insurance enables businesses to meet the costs of damages and legal fees for employees who are injured or made ill at work through the fault of the employer. Employees injured due to an employer's negligence can seek compensation, even if the business goes into liquidation or receivership.
Employers’ Liability Insurance must be taken out by all businesses with employees operating in England, Scotland, Wales and Northern Ireland.
While this guide cannot be used as a legal interpretation of Employers’ Liability Insurance, it can still provide you with a useful overview of its main features, and show you how it can work for your business.
If your company's based abroad
Under British law, Employers’ Liability Insurance is not required if your employees are based abroad. It is important to remember, however, that other countries may have similar requirements in place. It is essential that you check if this is the case to ensure that your workers are protected.
Please note that if your employees are normally based abroad but spend more than 14 days continuously in Great Britain, or more than seven days on an offshore installation, by law you will still need Employers’ Liability Insurance for them.
Get the right provider
You must make sure that you select an authorised insurer. If you don’t, you may be breaking the law by having invalid cover in place.
Authorised insurers are individuals or companies working under the terms of the Financial Services and Markets Act 2000. The Financial Services Authority (the FSA) is the regulator of all providers of financial services in the UK. You can find out if an insurer is registered by visiting www.fsa.gov.uk or by phoning 0845 606 1234.
Reading the small print
When you take out Employers’ Liability Insurance, you will form an agreement with your insurer about the circumstances in which they will pay compensation. The policy will cover the specific activities that relate to your business.
However, you should watch out for a number of conditions that may restrict the amount of money your insurer has to pay, which you cannot agree and your insurer cannot impose. It is essential you’re your contract does not contain any such conditions.
For example, your insurer cannot refuse to pay compensation simply because:
• You have failed to keep a record or provide information from those records to your insurer;
• You have not reported the incident or done anything else they told you to do;
• You have failed to provide reasonable protection for your employees against injury or disease.
However, this does not mean you can neglect your legal responsibilities to protect the health and safety of your employees. You are required to carry out risk assessments that comply with Health and Safety Executive guidelines. You must also take all reasonably practicable measures to protect your employees.
This is an important aspect of Employers’ Liability because if your insurer believes that you have failed to meet your legal responsibilities, the insurer may choose to take legal action against you to reclaim the cost of compensation.
Claim Examples
Amputation of Employee's Fingertip
An event production company were involved in a production in which scaffolding poles were being used on set. The poles had been loaded on to a small trailer being towed by a Land Rover and were strapped in place using conventional load straps.
When the Land Rover pulled off to take the poles to the rigging position, a member of the crew who was sitting in the trailer suffered a traumatic accident.
The crew member was using the poles to hold on to whilst the trailer was being moved but unfortunately the material he was holding on to was trapped under the wheel of the trailer. As it moved away, the material tightened around the Client's finger, causing the end of his finger to be severed. The claim was settled for £4,945.
Mesothelioma from working with asbestos
A mechanic worked with asbestos during the 1970s and 1980's when it was common practice to handle asbestos brake pads. When stripping out brakes or conducting repairs, the methods used and the lack of protective equipment meant that employees were exposed to dangerous spores and fibres, which led to mesothelioma.
The mechanic was diagnosed with lung cancer as a result of this exposure, and had to have a lung removed in 2004. He eventually received £300,000 in compensation.
Incomplete Paraplegia
A man in his late twenties suffered incomplete paraplegia arising from an industrial accident when he fell 6 feet through a fragile roof whilst working as a scaffolder. 85% liability blame was established against the Employer who had to pay £2.15 million in compensation.
Buy It!
Given the seriousness of the accidents described in this guide, it is not surprising that Employers’ Liability Insurance is compulsory cover. Even when every practical measure has been taken by an employer, workplace accidents can still happen and it is therefore essential that the employee and employer is covered in this instance.
If you are interested in obtaining an Employers’ Liability Insurance quotation, please visit our Employers Liability Insurance page. If you would like to discuss your business’ insurance requirements in more detail, please don’t hesitate to call us on 08081 68 68 68.
