Employers Liability2019-01-10T11:36:42+01:00

Employers’ Liability

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Employers’ Liability Insurance is a legal requirement for businesses within the United Kingdom with at least one employee. Under The Employers’ Liability (Compulsory Insurance) Act 1969 you are required to hold a policy with a minimum level (£5,000,000) of cover. Not holding a current Employers’ Liability policy that is compliant with current UK law could result in your business being fined up to £2,500 per day that a correct policy is not in place. Certain organisations are exempt from this. Employers’ Liability Insurance will cover your business should an employee look to bring a claim against it as a result of an alleged injury sustained or illness obtained as a result of work carried out. The policy will cover your business for related defence costs and any potential compensation.

Frequently asked questions (FAQ)

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What is covered by Employers’ Liability?2019-01-10T11:18:41+01:00

With Employers’ liability insurance it is possible to pay the compensation amount and legal costs if an employee claims compensation for a work-related injury or illness.

For example, a member of your team based in an office, trips over a trailing computer lead, they may decide to make a compensation claim. A court could order you as the employer to pay compensation for injury, costs and other damages related to the incident. In this case the compensation amount and legal fees could be paid for by the Employers’ Liability Insurance.

The insurance will cover the compensation payment and legal costs up to the limit of the policy, which would ordinarily be £10m.

How much can I expect to pay for Employers Liability Insurance?2019-01-10T11:05:00+01:00

There is no set cost for Employers Liability Insurance. It will completely depend on the type of work you do and can take into account your company turnover and number of employees dependent on the policy.

Do I need Employers’ Liability Insurance for Temporary Employees?2019-01-10T11:15:40+01:00

As with part time staff or volunteers, you will still need Employers’ Liability to cover temporary employees.

Do I need employers’ liability insurance for subcontractors?2019-01-10T11:03:19+01:00

It completely depends on whether they are ‘labour-only’ or ‘bona-fide’ subcontractors. Subcontractors who are ‘labour-only’ work under your direction and may wear your uniform and use your equipment and materials. These subcontractors are legally considered employees, and so they need to be covered by your Employers’ Liability policy.

‘Bona-fide’ subcontractors work under their own direction and provide their own working equipment and materials etc. They usually don’t need to be covered by your Employers’ Liability policy. It is always worth checking they have their insurance documentation before they start working for you however. For a clear indication of the differences between a Labour Only Subcontractor and a Bona Fide Subcontractor view our guide here.

Is Employers’ Liability a Legal Requirement?2019-01-10T11:00:58+01:00

Some organisations could be exempt from Employers’ Liability, for example those who only employ close family members (as long as they’re not incorporated as limited companies).

Most employers are required to have Employers’ Liability Cover of at least £5m or they could face fines of up to £2,500 per day. You will still require Employers’ Liability even if you have only part time staff or volunteers working for you.

Do I need to tell insurers if my turnover has increased during the year?2019-01-10T11:36:05+01:00

Only if you have no leeway within your policy and are required to do so under the terms of the wording. Most policies that require a turnover to be declared will be based on a year-end adjustable basis. This means that provided you do not exceed any of the triggers (i.e. exceed 25% or 50% of declared turnover) then you can wait until renewal and make a declaration. Insurers will reserve the right to charge if the amount is higher than the original declared amount. You will need to check what allowances your policy makes.

Do Insurers share information on claims?2019-01-10T15:03:58+01:00

On some occasions they do via selected registers. The best approach is to declare everything you think is relevant, thus removing any concerns you may have about historical data.

Do I need to declare any adverse financial history?2019-01-10T15:03:38+01:00

The answer is an emphatic yes! Most insurers will ask you a direct question in relation to liquidation or bankruptcies, it may be for a limited period or ask you to declare any incidents ever. It’s important to answer the question correctly as this is often an area that comes up when insurers are investigating claims.

What is a pro rata refund?2019-01-10T15:03:25+01:00

This is when a proportional amount of the premium is refunded in line with the amount of time that remained on the policy.

What is a minimum and deposit policy?2019-01-10T15:03:15+01:00

This is a non-refundable insurance policy, usually reserved for liability insurance policies.

Can I cancel my policy if I change my mind?2019-01-10T15:02:50+01:00

Consumer policies tend to have a cooling off period. Some commercial policies will offer a pro rata cancellation refund if cancelled mid-term. Some policies are known as minimum and deposit. This means all the premium is due from the moment you take up the policy with no refunds given. It is always worth consulting with us regarding any questions you have around this. Our aim is always to provide you with the insurance solution which best fits your business and current needs.

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