Under the Employers’ Liability (Compulsory Insurance) Act 1969 in Great Britain, most employers are required to insure against liability for injury or disease of an employee that pertains directly to their employment. Liability insurance is compulsory and is strictly enforced and inspected by the British HSE, it must be obtained from an approved insurer and generally must amount to between £5-10 million.
The Policy
Now, this is pretty technical stuff, but it’s important. So pay attention! Employers’ liability insurance differs from public liability insurance. Instead of covering an employer from claims made against them by the public, or another business, it refers only to the claims made by employees. Basically, the insurance allows the employer to meet the cost of compensation for their employee’s illness or injury, regardless of where it has happened. When you’re setting out to buy liability insurance always remember that only authorised insurance companies, individuals, or companies working within the terms of the Financial Services and Markets Act 2000, can sell this type of insurance.
On the outset, the employer always agrees with the insurance company to the circumstances in which they will pay compensation. However, it should be kept in mind that there are conditions they are not allowed to impose. For instance, the insurer is not entitled to refuse to pay compensation purely because the employer has not provided reasonable protection, or has kept and provided specified records, because the employer has done something they were told not to, or inversely have not done something they were told to.
Essentially, if the employer has not met a legal requirement in the protection of employees, they’re not going to be covered, they must, as usual, carry out a sufficient risk assessment and take suitable measures to protect employees and report incidents. If they fail to do so, they potentially face being sued by their insurance company trying to reclaim costs.
Do you need it?
If you’re working in the UK, yes. Liability insurance is mandatory in Great Britain, and failure to comply with the law has some serious repercussions. Companies can be fined £2500 for any day without suitable insurance and can even be fined up to £1000 if the certificate of insurance is not displayed, or made available to HSE inspectors when they ask. While not strictly compulsory in Ireland, where it is often sold hand-in-hand with public liability insurance, a robust liability insurance policy is highly recommended, if not downright essential. £5 million is considered the minimum level of cover, and employers are even urged to take out policies in excess of this figure.
Image courtesy of Frédéric BISSON used under Creative Commons