Employer’s liability insurance is a legal requirement for anyone running a business in the UK that employs one or more employees. The insurance protects the business owner in the event that an employee is injured or becomes ill as a result of their job. The policy will also cover any legal costs that may be incurred if the employee takes legal action against the business.
Employer’s liability insurance is available from a variety of insurers and can be purchased as a standalone policy or as part of a wider business insurance package. It is important to shop around for the best deal and to ensure that the policy meets your specific needs.
In this guide, we are going to take a deeper look at employer’s liability cover, why it is vital for businesses regardless of the fact that it is required by law, and what might happen if you do not have it in place.
What does employer’s liability insurance cover?
Employer’s liability insurance protects the company owner in the event that an employee is hurt or becomes sick as a result of their work. This could be due to an accident at work, exposure to hazardous materials, or an illness that has been contracted as a result of working in close proximity to other employees.
The policy will also cover any legal costs that may be incurred if the employee takes legal action against the business. This could include compensation for loss of income, medical expenses, or pain and suffering.
What are the benefits of employer’s liability insurance?
There are several key benefits of having employer’s liability insurance in place:
- It is a legal requirement, so you cannot operate your business without it.
- It protects the company owner from any potential legal costs that may be incurred if an employee takes legal action against the business.
- It covers an employee’s medical expenses and loss of income if they are injured or become ill as a result of their job.
- It can be purchased as a standalone policy or as part of a wider business insurance package.
What happens if I do not have employer’s liability insurance?
If you are running a business in the UK and do not have employer’s liability insurance in place, you could be fined up to £2500. You could also face civil action from an employee if they are injured or become ill as a result of their job. In some cases, the employee may be able to claim compensation from the government-funded National Insurance Fund.
It is therefore essential that you take out employer’s liability insurance to protect yourself and your business.
How do I choose the right policy?
When choosing employers’ liability insurance, you will need to decide on the level of cover that you require. This will depend on the size and nature of your business, and on the type of work that your employees do. You should also make sure that the policy meets your specific needs.
Some things to consider include:
- The amount of cover that you need – make sure that the policy will provide enough protection in the event of an accident or illness
- Whether the policy covers legal costs incurred as a result of employee action
- What activities are covered by the policy
- Whether you want worldwide cover or just UK cover
- Whether the policy is for a one off payment or annual payments
- The level of excess that you are willing to pay in the event of a claim.
When did employer’s liability insurance become a legal requirement in the UK?
Employer’s liability insurance became a legal requirement in the UK in 1965. This means that all businesses with one or more employees must have a policy in place to protect themselves from any potential claims.
It came about because of the increasing number of lawsuits that were being brought against businesses by employees who had been injured or made ill as a result of their job. Prior to this, there was no specific legislation requiring employers to have insurance in place, but it was generally accepted that this type of cover was good practice.
Previously, the National Insurance Fund had been used to pay out compensation to employees, but this fund was becoming increasingly depleted. The government felt that it was necessary to introduce legislation to make employer’s liability insurance mandatory in order to protect both the employees and the businesses themselves.
What is the National Insurance Fund?
The National Insurance Fund is a government-funded organisation that provides compensation to employees who are injured or become ill as a result of their job. The Fund is financed by contributions from both employers and employees. If an employee takes legal action against their employer and wins, the National Insurance Fund will provide compensation for damages, legal costs, and any other expenses related to the case.
How much does employer’s liability insurance cost?
The cost of employer’s liability insurance will vary depending on the size and type of business, the number of employees, and the level of cover that is required. However, it is generally quite affordable, and there are a variety of policies available to choose from. It is important to shop around for the best deal and to ensure that the policy meets your specific needs. Typically, however, it costs between £100 and £200 per year for a policy that provides £1 million in cover.
You can get lower premiums by taking out a policy with a higher excess, or by choosing a policy that does not include legal costs. It is also possible to get a discount on your premium if you take out cover for more than one business.
What activities are covered by employer’s liability insurance?
Employer’s liability insurance covers a wide range of activities, from manual labour to office work. It is important to check the policy wording carefully to make sure that all of the activities that your employees undertake are covered.
Also bear in mind that if you run an international business with hundreds of employees, you’ll need to ensure they are covered. It is possible to get worldwide cover with employer’s liability insurance, but this will usually be more expensive than getting UK-only cover. It is important to check the policy wording carefully to make sure that you are covered for any activities that take place overseas.
Do I need employer’s liability insurance if I only have one employee?
Yes, you still need employer’s liability insurance even if you only have one employee. This is because the policy provides protection for both the employees and the business itself. It is good practice to have a policy in place regardless of how many employees you have. Even volunteer employees need cover, so it is important to make sure that your policy includes them.
It pays to have peace of mind, no matter what kind of business you run. Employer’s liability insurance is a great way to remain protected while also creating a sense of safety and harmony among your staff, who know they are protected no matter what may happen.
