Employers Liability Insurance: What Is It? Do I Need It?

Employers Liability Insurance (ELI) is a critical component of business insurance in the UK. It protects employers against claims made by employees who have suffered injury or illness due to their work. In this comprehensive guide, we'll explore what Employers' Liability Insurance is, its legal requirements, costs, exemptions, and responsibilities, ensuring that employers, employees, and companies researching this vital coverage have all the necessary information at their fingertips.

What is Employers Liability Insurance?

Employers Liability Insurance is a type of insurance policy designed to protect employers from liabilities arising from workplace injuries or illnesses their employees suffer. It covers legal costs, compensation claims, and other expenses incurred if an employee sues their employer for work-related injury or illness damages.

Legal Requirements and Costs

Employers Liability Insurance is a legal requirement in the UK for most businesses that employ staff. The requirement is governed by the Employers' Liability (Compulsory Insurance) Act 1969, which mandates that companies must have at least £5 million of ELI coverage. Failure to have this insurance can result in severe penalties, including fines of up to £2,500 per day.

The cost of Employers Liability Insurance varies depending on factors such as the nature of the business, the number of employees, and the level of risk associated with the industry. Typically, premiums are calculated based on the size of the workforce, previous claims history, and health and safety measures implemented by the employer.

Exemptions and Exceptions

While most businesses are required to have Employers' Liability Insurance, some exceptions exist. Sole traders who do not employ any staff, certain family businesses where all employees are close relatives, and companies where the only employee also owns 50%, or more of the issued share capital are exempt from the legal requirement to hold ELI.

However, it's essential to note that obtaining Employers Liability Insurance is highly advisable even if a business is exempt from the legal requirement. It provides financial protection and peace of mind in the event of unforeseen accidents or injuries in the workplace.

Responsibilities of Employers

Employers have several responsibilities concerning Employers Liability Insurance:

1. Provide a Safe Working Environment: Employers must ensure their employees' health, safety, and welfare by implementing appropriate safety measures and providing necessary training and equipment.
2.  Display the ELI Certificate: Employers must prominently display the Employers Liability Insurance certificate so employees can easily read it. Doing this ensures transparency and informs employees of their rights.
3.  Keep Records: Employers are required to keep accurate records of their ELI policy and provide details to employees if requested.
4.  Report Incidents: Employers must promptly report workplace injuries or incidents to their insurance provider. This allows for the timely processing of claims and investigations.

When Employers Can Be Liable

Employers can be liable for their employees' injuries or illnesses if negligence or breach of duty on the employer's part is proven. This includes failing to provide a safe working environment, inadequate training, or ignoring health and safety regulations. In such cases, employees may file compensation claims against their employers, and Employers Liability Insurance covers the legal costs and compensation awarded.

Conclusion

Employers' Liability Insurance is a crucial aspect of business protection in the UK. It provides financial security and legal protection for employers, employees, and businesses alike. Understanding the legal requirements, costs, exemptions, and responsibilities associated with ELI is essential for ensuring compliance with the law and safeguarding against potential liabilities.

Whether you're an employer seeking to ensure you have the correct coverage, an employee wanting to understand your rights, or a company researching Employers Liability Insurance for your business needs, investing in this essential coverage is a prudent decision that can protect both your workforce and your bottom line.

If you are affected by an incident requiring you to make a Commercial Claim, although we cannot assist with life insurance or health claims, as multiple award-winning Loss Assessors, we can help with property or business interruption claims.