Employers Liability Insurance

Employers Liability Insurance covers you or your company's legal liability in the event of bodily injury, death, illness or disease to your employees whilst carrying out work on your behalf.

In the UK, many employers liability insurance claims are made each year and the trend is growing rapidly as more people become increasingly aware of their right to seek compensation.

Is Employers Liability Insurance Compulsory?

The Employers' Liability (Compulsory Insurance) Act 1969 requires all employers carrying on business in Great Britain to insure against their legal liability for injury or disease caused to their employees in the course of their work for them.

Failure to take out employers liability insurance could result in a fine of up to £2,500 per day for each day you don't have it.

Generally, most insurers will only cover employers liability insurance as part of a combined public and employers liability insurance policy to ensure that they insure the whole liability risk rather than just a part of it.

Employers Liability Insurance Certificates

As employers liability insurance is a compulsory insurance and also in an attempt to make sure that employees can check that the employer is complying with the Act, the Employers' Liability (Compulsory Insurance) General Regulations 1971 make it compulsory for the insurers to issue certificates of insurance. These certificates must be displayed or made available to employees at at each of the employers places of business. Since 1st October 2008, employers have been allowed to display certificates electronically providing they make it easy for employees to access the certificate.

The employers liability certificate of insurance should show the full name of the employer and any subsidiary companies included under the liability cover.

The Employers Liability Compulsory Insurance Act requires:

Every employer carrying on any business in Great Britain shall insure, and maintain insurance, under one or more approved policies with an authorised insurer or insurers against liability for bodily injury or disease sustained by his employees and arising out of and in the course of their employement in Great Britain in that business, but except in so far as regulations otherwise provide not including injury or disease suffered or contracted outside Great Britain

In relation to the Act:

an 'employee' is an individual who has entered into, or works under, a contract of service or apprenticeship with an employer whether by way of manual labour, clerical work, or otherwise, whether such a contract is expressed or implied, oral or in writing.

The reason for the Act is to provide security for employees in the event that they have an accident at work for which the employer is responsible.

Employers Liability Insurance Exemptions

The Act exempts:

• certain employers, such as public and nationalised industries, local authorities, police authorities, etc.
• employers only employing their owner where that employee also owns 50% or more of the issued share capital in the company, for example, sole directors of a limited company.
• family businesses who have employees that are closely related such as a husband, wife, civil partner, father, mother, grandfather, grandmother, son, daughter, grandson, granddaughter, stepson, stepdaughter, brother, sister half-brother or half-sister. This exemption does not apply to businesses which are incorporated as limited companies.

It is important to note that employees could still sue for compensation regardless of the rules regarding the exemption. If employers choose not to insure, they could still be legally liable for any compensation due to employees and this would have to be paid from their own resources. We would always recommend that this cover be included even if you are eligible for the exemption.

Employers' Liability Insurance Cover

Unlike public liability insurance, there is no cover for damage to property, only injury to employees.

Definition of Employee

Most insurers will include a definition of employee within the policy wording.

In addition to direct employees, most insurers generally include liability to other workers such as:

• self-employed persons;
• persons employed under labour-only sub-contracts;
• labour masters and persons supplied by them;
• voluntary workers.
• persons hired or borrowed by the insured under an agreement by which the person is deemed to be employed by the insured;
• persons engaged on work experience or similar schemes;

The injury or disease must be caused 'in the course of employment'. There have been several legal cases made on this point, particularly in relation to the time of starting and finishing work.

The injury must also arise 'in connection with the business'. This must be accurately described on the proposal form to your insurers to ensure that you are fully covered in the event of a claim.

Finally, the 'injury' must also have occurred during the period of insurance.

Employers Liability Insurance Territorial Limits

The employers liability insurance territorial limits are usually defined as:

• within Great Britain, Northern Ireland, the Channel Islands or the Isle of Man; or
• anywhere in the world in connection with temporary visits by employees provided that such employees are normally resident in the territory above.

Employers liability premiums are based on the business trading within the UK with occassional overseas visit by a non-manual worker. Legislation and law relating to employers' liability vary throughout the world and therefore cover should ideally be arranged by an insurer in that territory concerned for overseas workers.

Employers Liability Limit of Indemnity

The minimum limit of indemnity for employers liabiity insurance is contained in the Employers' Liability (Compulsory Insurance) Regulations 1998, and is £5 million;

• in respect of claims relating to any one or more employees; and
• arising out of any one occurrence.

Most insurers offer a standard £10 million limit of indemnity, however higher limits can be arranged if required.

Under employers liability insurance, the limit of indemnity is the maximum the insurer will pay:

• for damages awarded to the claimant; and
• including costs and expenses, incurred subject to their written consent.

This is known as a 'costs inclusive' cover and therefore you should ensure that the limit is sufficient for your needs.

The limit of indemnity applies to each insured event and there aren't any limits on the number of incidents or events during the period of insurance.

Further information regarding employers liability insurance can be found in the HSE Employers Liability Insurance Guide

Free Employers Liability Insurance Quotes

To apply for your free employers liability insurance quote, please either phone us on 01623 641386 or complete our liability quote form and we will be pleased to assist you.

If you wish to phone us, our office hours are 9.00 a.m. to 5.00 p.m. Monday to Friday.

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Midlands Insurance Services are authorised and regulated by the Financial Conduct Authority. FCA Number 306382.