Employers’ liability insurance covers the cost of compensating employees who are injured at work or become ill through work.
The benefits are that you and your employees will be reassured to know that in the event of injury or harm then their legitimate losses/injuries will be covered, as will any legal fees.
As a business owner, you’ll be more secure knowing that the business is less likely to be driven into bankruptcy from claims not covered by an insurance policy.
The insurance policy will also cover your legal position and requirement to have a policy.
Unless you have no employees or are a family business that employs only family members, you are legally obliged to have employers’ liability insurance.
You can be fined up to £2,500 for every day you operate without it.
Can my employers' liability insurance policy contain conditions?
When taking out employers' liability insurance, make sure that the policy covers all of your business activities, otherwise your insurer could throw out a claim.
According to the Health and Safety Executive, your insurer isn’t entitled to refuse to pay compensation purely because:
- You didn't provide reasonable protection against injury or disease.
- You can't provide certain information to the insurer.
- You went against their advice (for example, admitted it was your fault).
- You omitted to do something they told you to (e.g., report the incident).
- You failed to meet any legal requirement connected with the protection of your employees.
None of this means you can overlook your legal duty to safeguard the mental and physical wellbeing of staff.
You must carry out regular risk assessments, and take practical steps to care for your employees and report incidents.
Your insurer could turn the tables on you by claiming that you have failed to meet your duty of care for the health and safety of your employees, and that this failure on your part has led to the claim.
In this way the policy may allow the insurer to sue you and claw back the cost of the compensation.