A useful guide to employers’ liability insurance for small businesses

There is only one business insurance policy that you are legally required to hold as a small business, under the Employers Liability Act (1969), and that is employers’ liability insurance (EL).

Employers are responsible for the health and safety of their employees while they are at work. Your employees may be injured or suffer disease whilst in your employment, or your former employees may suffer an illness such as noise induced hearing loss, or breathing difficulties, as a result of work they undertook while in your employment.

It is important to follow the law, because if you do not hold EL insurance and you employ staff, the Health and Safety Executive (HSE) can fine you £2,500 for each day you are uninsured.

What cover does employers’ liability insurance provide?

EL insurance covers your business if one of your staff members claims they have suffered an illness or injury because of working for you. The policy covers legal fees and compensation costs involved in defending the case.

Cover provided by EL can include medical costs, legal costs, loss of income, as well as other damages awarded.

What is not included in employers’ liability insurance?

There can be a great deal of misunderstanding when it comes to business insurance policies and what they cover.

Employers’ liability insurance will only cover you for accidents and injury to your employees. It will not respond to claims made against you from the general public if they have an accident on your premises or if you accidentally damage their property. For that you will need public liability insurance (PL).

Nor will EL insurance provide cover for allegations of negligence in your work. For that you will need professional indemnity insurance (PI).

Find out more about the differences between these policies here.

Why does a small business need employers’ liability insurance?

• EL insurance protects both your employees and your business.
• In the event of a claim, the policy responds to cover your legal fees and associated costs, meaning you will not have to pay out any monies from your own pocket.
• It is a legal requirement if you employ staff.
• You can be fined £2,500 for every day you are not covered.
• You can be fined £1,000 If you do not have a certificate of EL insurance that is accessible by staff or refuse to make it available to Health & Safety Executive (HSE) inspectors when they ask for it.

What type of small businesses benefit from employers’ liability insurance?

Any business which employs staff, regardless of size. You will need it if:

• You deduct Income Tax and National Insurance Contributions from the money you pay your employees.
• You have control over where and when your employees work.
• You have the right to claim profit made by your employees.
• You provide the equipment and materials your employees use.
• You need them to perform the job you employ them for and if the employee is unable to provide a substitute if they are unable to work.
• You have part-time or temporary employees.

How much does employers’ liability insurance cost?

The cost of any insurance policy depends on your level of risk. At Caunce O’Hara we offer employers’ liability insurance as part of a combined liabilities package, which includes public liability insurance (£1million of cover), employers’ liability insurance (£10million of cover), general contents insurance, portable equipment insurance, and directors’ and officers’ liability insurance. Cover price for this package begins at £112.00 per annum*.

* The annual price quoted is based on a marketing consultant with a turnover up to £50,000 per annum, requiring the abovementioned covers, and with no claims history and meeting all underwriting criteria.

What points should business consider when choosing employers’ liability insurance?

There are a number of key points to consider when choosing your EL cover, including:

The level of cover required – We offer EL insurance at £10million of cover as standard as part of our business combined liabilities package.

Click here for an EL insurance quote.

Your business activities – Some insurers may offer EL insurance at the legal minimum of £5million of cover, which may reduce the price of the policy. Before purchasing a policy based on price you should consider your business activities and ensure they are fully covered. Less cover and a cheaper premium may mean some of your key activities are excluded from cover.

You are adequately compensated for loss of work – This aspect of cover could be important if you have to attend court which could result in you losing valuable work days and could impact your income.

The reputation of the insurance company – When arranging your insurance you’ll want to be sure your policy will pay out when you need to make a claim. It’s prudent to do some due diligence prior to buying your cover by looking at the insurers testimonials.

If all your employees are immediate family – According to government legislation, if you only employ family members you may not need employers’ liability insurance. Check with your insurer first before deciding not to purchase cover or deciding to cancel your existing cover.

Are there limits for employers’ liability insurance?

The insurance limit refers to the maximum amount you can make a claim for, based on your EL policy. The legal minimum requirement of cover is £5million. At Caunce O’Hara we offer employers’ liability insurance with £10million of cover as standard.

What insurance do I need as a small business?

Other policies to consider include:

• Employers’ liability insurance (EL) as we’ve already mentioned.
• Public liability insurance (PL)
• Portable equipment insurance
• Professional indemnity insurance (PI)
• Directors’ and officers’ liability insurance (D&O)
• Legal expenses insurance
• Personal accident insurance
• Cyber liability insurance
• Commercial crime insurance

Click the ‘Start Your Quote’ button for a quick online quote for your business insurance.

Sources:

https://www.legislation.gov.uk/ukpga/1969/57/section/2

www.companieshouse.blog.gov.uk/2019/04/30/what-insurance-does-a-small-business-need/

https://www.gov.uk/employers-liability-insurance