Employers’ Liability Insurance FAQs

Anyone who employs staff is responsible for providing a safe working environment for their employees and training them to adequately and safely carry out their roles.

Employers Liability insurance covers you, the employer, when claims are brought against you from employees, for legal expenses or compensation if the employee sues you for failure to provide that safe working environment, or allowing poor working practices to continue, and this subsequently causes them an illness or injury. Ultimately, as an employer, you can be held liable if an employee falls ill or suffers an injury in the context of their work and this cover protects you in such circumstances.

Compensation can include for the personal injuries themselves, an employee’s loss of earnings, as well as other financial losses they suffer as a result.

Common types of accidents at work include*:
–        Handling/lifting heavy objects
–        Falls from a height
–        Slips, trips and falls
–        Electric shocks
–        Chemical injuries
–        Industrial diseases
–        The actions of a co-worker

If you have any employees, whether full-time, part-time, temporary employees, unpaid volunteers, interns or even work-experience students from a local school, it is a statutory requirement to have Employers Liability cover in place**. You can even be fined up to £2,500 for each day you do not have this cover in place, and up to £1,000 if you do not display your Employers’ Liability certificate or refuse to make it available to inspectors when asked***.

In addition, in almost all cases of workplace injury claims, compensation is paid out by the Employers’ Liability insurance provider****, not the employer; such claims can become extremely high value depending on the circumstances, which means Employers’ Liability insurance can be invaluable in keeping a company afloat, should the worst happen.

Legally, you are required to have a Limit of Indemnity of at least £5m for Employers’ Liability; however, insurers invariably set the limit at £10m in the policies they issue, so you don’t usually have to select a level of cover.

You may decide you need to set this higher depending on the work you carry out or the number of employees in a specific location – this is something we will always discuss with our clients to help them obtain a suitable limit for their specific business.

Any insurance premium is calculated on the risk that it presents to the insurer issuing the cover. As such, a business employing a scaffolder or welder is going to have a higher premium for Employers Liability than say one that is employing someone purely involved in clerical activities. Therefore, the cost of the cover will always be dependent on the specific business, the limits it requires and the risk it presents.

Employers’ Liability covers your responsibility to your employees only (as outlined in question 2); Public Liability covers your responsibility to everyone else. Employers’ Liability is compulsory insurance; Public Liability is not.

Examples of claims under Employers’ Liability cover:

·        An employer was found negligent in failing to take steps to obviate the risk of an employee, who complained of being overworked and stressed and who had a history of depression, from suffering from a nervous breakdown.
·        Employers were found liable on the basis that they had negligently exposed an employee to asbestos and thereby created a material risk of mesothelioma which had eventuated.
·        Employer found liable for an employee slipping on ice in the car park and suffering an injury.

In short, yes. It is considered to be an “Allowable Expense” so it is one of the costs you can deduct when calculating your taxable profit.