Employers Liability Insurance Explained

Employers Liability Insurance — By admin on February 8, 2010 at 9:01 am

What is Employers Liability Insurance?

Employers Liability Insurance policy covers your small business in the event that an employee is injured while at work. This policy protects an employer from any liabilities that relate to diseases, fatalities or injuries that are acquired as a result of workplace conditions or practices.

Employers Liability Insurance allows businesses to meet the cost of any damages or legal costs of employees who are ill or injured through the fault of the employer.

Are All Businesses Required To Take Out Employers Liability Insurance Cover?

It is a legal requirement for any employer to take out the Employers Liability Insurance policy. There are a few exceptions to this rule, such as, if you are a sole trader and do not employ anybody else apart from close family members in your business.
By law any business that has employees is required to take out an insurance policy that covers the business for £5 million, however, most insurers will automatically offer a business £10 million in cover.

An employee is usually defined as follows:

they are under a contract of service
you deduct National Insurance contributions and income tax from the salary you pay them
you control when, where and how they work
they cannot employ a substitute when they are unable to work

Other legal requirements

After you take out this compulsory insurance policy you will be required to display a copy of the certificate where employees can easily read it. This can be a paper copy on a wall or a digital copy placed on the company’s intranet. If you fail to produce a valid certificate to the Health & Safety Executive (HSE) then you will be fined up to £2500 for each day that you fail to have insurance cover.

It is also recommended that any employer keeps a copy of their Employers Liability Insurance policy for as long as possible. This is because some diseases often take years to surface and a business could be forced to meet the costs of the damages if they cannot prove they were insured during the period that the employee contracted the disease.

While some small business owners may dislike the idea of paying for Employers Liability Insurance, it is necessary by law and will help to ensure that your business continues to function if an employee claims for damages or legal costs.