What is Employers’ Liability Insurance
4th of October 2024
5 minute readAs a business owner, keeping your employees safe is a top priority. Employers’ liability insurance helps protect your business if an employee is injured or becomes ill because of their work. We’re here to help you understand how this insurance works and why it’s essential for your business.
Employers’ liability insurance covers businesses if an employee becomes sick or injured due to their job. It pays for legal costs and compensation claims, ensuring that employers are protected from the financial impact of workplace accidents or illnesses.
Want to learn more about how employers’ liability insurance can protect your business? Keep reading to find out what’s covered, why it’s required, and how to choose the right policy for your company.
What is Employers’ Liability Insurance?
Employers’ liability insurance is a type of cover that protects businesses if an employee is injured or falls ill as a direct result of their work. In the UK, it’s a legal requirement for most employers to have this insurance in place. If an employee claims that their injury or illness was caused by their job, employers’ liability insurance covers the costs of defending the claim in court and any compensation that may be awarded.
For example, if an employee in a construction company suffers an injury from faulty equipment or unsafe working conditions, they could claim compensation. Employers’ liability insurance would cover the legal fees and any compensation awarded to the employee, protecting the business from having to pay out-of-pocket.
This insurance is crucial for all types of businesses, whether you have one employee or hundreds. Without it, even a small claim could lead to substantial legal fees and compensation costs, putting your business at financial risk.
Why is Employers Liability Insurance Important?
Employers’ liability insurance is not only important but also legally required for most businesses in the UK. The law states that if you employ staff, you must have a minimum of £5 million in employers’ liability insurance. This requirement ensures that employees are protected if something goes wrong at work.
Accidents can happen in any workplace, whether it’s an office, a retail shop, or a construction site. If an employee is hurt or becomes sick because of the work they do for you, they may be entitled to claim compensation. Without employers’ liability insurance, your business would be responsible for covering these costs, which could easily run into thousands or even millions of pounds.
Having this insurance also shows your employees that you take their safety seriously. Knowing that they’re protected in case of accidents or illness builds trust and helps create a positive work environment. It’s a safety net that benefits both your business and your employees.
What Does Employers’ Liability Insurance Cover?
Employers’ liability insurance provides cover for several situations where an employee might suffer an injury or illness because of their job. Here are the key areas it covers:
- Injuries at Work
If an employee is injured while performing their job, such as slipping on a wet floor or being hurt by faulty equipment, employers’ liability insurance will cover the legal costs and compensation if the employee sues. - Work-Related Illness
If an employee becomes sick because of their working conditions or the nature of their job, they could claim compensation. This includes illnesses like repetitive strain injuries, hearing loss due to noisy work environments, or breathing problems from poor air quality. - Long-Term Health Problems
Employers’ liability insurance also covers claims from employees who suffer long-term health problems as a result of their work. This could include conditions like stress-related illnesses, chronic pain, or other work-induced health issues that develop over time. - Legal Fees
If an employee takes legal action against your business, employers’ liability insurance covers the costs of defending the claim in court. Legal fees can add up quickly, so this is an essential part of the coverage. - Compensation Payments
If an employee wins their claim and is awarded compensation, the insurance covers these payments. This helps protect your business from having to pay large sums out of pocket.
Who Needs Employers’ Liability Insurance?
Most businesses in the UK that employ staff are legally required to have employers’ liability insurance. This includes full-time employees, part-time workers, and temporary staff. Even if you only have one employee, you are still required by law to have this insurance.
There are a few exceptions to this rule. For example, if you only employ close family members or people who work for you outside of the UK, you may not be required to have employers’ liability insurance. However, it’s always a good idea to check the specific legal requirements for your type of business.
Here are some examples of businesses that need employers’ liability insurance:
| Business Type | Why It’s Needed |
|---|---|
| Retail Shops | Employees may suffer slips, trips, or falls. |
| Construction Companies | High-risk environment with potential for accidents. |
| Offices | Even low-risk environments can have accidents, like trips or repetitive strain injuries. |
| Factories |
Risk of machinery-related accidents or exposure to harmful substances. |
How to Choose the Right Employers’ Liability Insurance
Choosing the right policy for your business can seem overwhelming, but by considering a few key factors, you can find the best fit. Here’s what you should keep in mind:
- Coverage Amount
By law, you need at least £5 million of coverage. However, depending on the size of your business and the risks involved, you might want more. If your business is in a high-risk industry, like construction or manufacturing, consider getting higher coverage. - Risk Assessment
Think about the specific risks your employees face. For example, if they work in dangerous environments, you’ll need a policy that covers those risks. A risk assessment can help identify potential hazards and guide your choice of insurance. - Premium Costs
The cost of employers’ liability insurance depends on factors like the size of your business, the number of employees, and the level of risk involved. Get quotes from several insurers to find the best price for the coverage you need. - Policy Exclusions
Always read the fine print. Some policies may exclude certain types of claims, so it’s important to make sure the policy you choose covers all the potential risks your business faces.
By taking the time to compare policies and ensure you have adequate coverage, you can protect your business and your employees from unexpected costs.
FAQ
What is employers’ liability insurance?
Employers’ liability insurance protects businesses if an employee gets injured or sick due to their job. It covers legal fees and compensation payments if an employee sues for work-related injuries or illnesses.
Is employers’ liability insurance required in the UK?
Yes, it’s legally required for most businesses in the UK that have employees. You must have at least £5 million in coverage to comply with the law.
How much does employers’ liability insurance cost?
The cost varies based on factors like the size of your business, the number of employees, and the level of risk. High-risk industries, such as construction, may have higher premiums.
What happens if I don’t have employers’ liability insurance?
If you don’t have employers’ liability insurance and are required to by law, you could be fined up to £2,500 for each day you’re not insured. Additionally, you would have to pay any legal fees or compensation out of pocket if an employee makes a claim.
Who is exempt from needing employers’ liability insurance?
Some businesses are exempt, such as those that only employ close family members or people working outside the UK. However, most businesses with employees will need this cover.
Employers’ liability insurance is essential for protecting your business from unexpected claims. It not only helps you meet legal requirements but also ensures your employees are taken care of if something goes wrong at work. Make sure you have the right cover to protect your business today.