What is Employers Liability (EL) Insurance?
Employers have a responsibility to provide their employees with a safe working environment. Failure to do so can lead to the employee looking to pursue damages as a result of the company’s health and safety failings. EL insurance is designed to allow the company to meet the cost which they become legally liable to pay including legal expenses following the injury to or illness of an employee at work which has arisen out of and in connection with the business. This can be something as simple as an employee tripping over a computer cable or slipping on a wet floor. If the company is found to be negligent, then they will be liable to pay compensation.
Do I need it?
The simple answer is yes. The Employers Liability Act 1969 made the insurance compulsory in the UK and must be purchased by all companies who employ persons under a contract of service or apprenticeship with the exception of the sole trader and companies with a single employee who owns over 50% share in the company.
What are the consequences of not purchasing the insurance?
An EL claim can leave a big dent in a large company balance sheet if they don’t have adequate cover in place and can be even more disastrous for small companies with payouts ranging from a few thousand to millions of pounds.
The benefits of having EL insurance in place are becoming increasingly more evident in recent times with the blame culture and economic recession leading to the potential for an increase in fraudulent claims. According to the Association of British Insurers in 2009, 107,000 filed clams worth a total of £730 million were found to be false.
What happens if I don’t have cover?
Although compulsory, the Health and Safety Executive estimated that back in 2003 approximately 10,000 companies throughout the UK were operating without cover and I would image that this has increased in the past few years with companies struggling to survive the recession and cutting corners on with their insurances to save money. It should also be noted that a company found to be operating without EL insurance can be fined up to £2,500 per day that cover is not in place.
What level of cover will a policy give me?
The UK minimum legal requirement for EL insurance is £5 million; however the market standard issued by insurers is £10 million, written on a per occurrence basis and unlimited during the policy period, essentially meaning that the insurer will pay up to £10 million pound including legal costs for a single claim.
How much does it cost?
This really depends upon the industry, employee activities and the wageroll for your company. A typical standalone EL policy can start from £1,000, which itself is not cheap if you are just starting out. There are a few options however if for example you are an office based company with clerical workers. I.e. a broker, accountant, sales office, etc... You may be able to purchase an office combined policy providing Employers Liability, Public Liability and Material Damage cover for your assets along with various other insurance from as little at £350.
For full details of you legal obligations regarding EL insurance please click -
(For full impartial advice regarding your insurance requirements please discuss with your broker)