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Understanding Employers’ Liability Insurance

An insight into Employers' Liability Insurance

What is Employers’ Liability insurance?

Employers’ Liability insurance provides cover for employers against claims made by employees who have suffered an injury, disease or illness in the course of their employment. The insurance would cover the cost of the compensation payment and any legal costs.

If you employ staff, you are responsible for their health & safety at work.

Claims can be made by current or previous employees if their injury, disease or illness resulted from the work undertaken.

Who is an employee?

As defined in your policy, but typically any:

  1. Person under a contract of service or apprenticeship with the insured
  2. Self-employed person labour only sub-contractor labour master or person supplied by any of them
  3. Person seconded to acquire work experience under a scheme or otherwise
  4. Person hired to or borrowed by the insured
  5. Voluntary worker

Whilst working for the insured in the course of the trade or business.

This definition is not applicable to the employment protection insurance section which has its own definition of employee applicable to that section only.

How much Employers’ Liability insurance do you need?

The Employers’ Liability (compulsory insurance) Act 1969 requires employers to have at least £5m of employers’ liability insurance. The Darwinsure policy provides £10m of cover.

Do you need to tell employees about this insurance?

You will be issued with a certificate of Employers’ Liability insurance when you arrange the cover. This will state the minimum level of cover required and the company covered by the policy. You should display a copy of this certificate where all your employees can read it and make it available to be checked by health and safety executive inspectors or face being fined up to £1000.

You should also retain copies of certificates of insurance for at least 40 years (for policies in force since 1998 or later). This is for your own protection as some diseases can occur many years after the disease is caused.

How easy is it to arrange Employers’ Liability insurance?

It’s simple with Darwinsure. When you apply for a Public Liability insurance online you will be asked to confirm how many employees you have and the quotation will include the cover.

What is the Employers’ Liability Tracing Office?

The Employers’ Liability Tracing Office (ELTO) is an Insurance industry wide initiative to help those who have suffered injury or disease in the workplace, trace relevant Employers’ Liability Insurers for a centralised database of Insurance records.

ELTO’s members are required to supply policy data on all new and renewed Employers’ Liability Policies from April 2012.

This includes the Employers’ Reference Number (ERN).  Only a tiny minority of employers will not have an ERN.  Your ERN is printed on mandatory documents including P45, P60, P11D and on most payslips.

How can you reduce the risk of a claim?

Good health and safety practices and training are a great place to start as these can help minimise the chance of an accident or illness. Ensure you know the regulations for your industry and carry out risk assessments and training with your employees.

Example of an employers liability claim

An employee injured their back when unloading a heavy piece of equipment from a van on site .

The employer had not provided any manual handling training or undertaken a risk assessment and was liable for the resulting claim totalling £20,000 including costs and expenses.

What can happen if you do not have Employers’ Liability Insurance?

If you employ staff and don’t take out Employers’ Liability insurance, you could be asked to pay a £2,500 fine for each day you do not have it.

Make sure you tell us the correct number of clerical and manual staff, if you employ both.

Immediate members of your family who work for you do not count as employees for Employers’ Liability insurance, however casual workers, part-time workers and temporary staff do count.

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