Is employers' liability the same as professional indemnity?
What is professional indemnity insurance?
This is a type of insurance that protects you or your business if you are successfully sued because the advice, design, specifications, or instructions you provided resulted in financial loss to a client.
Do I need professional indemnity insurance?
Cover is recommended if you or your business provide professional services, recommendations, or advice.
If you are successfully sued in respect of the services you provide, and you cannot pay because you do not have insurance, your cash flow and ability to do business could be seriously impacted. In a worst-case scenario, it could even result in bankruptcy.
Am I legally required to have professional indemnity insurance?
You are not required by law. However, it is recommended as the cost of a successful claim can be financially devastating.
Some professional bodies insist you have cover in order to become a member. In addition, some organisations will not contract with a business that does not have cover.
What is employers’ liability insurance?
This is another type of business insurance. It protects you or your business if you are successfully sued by a current or former employee for an injury or illness suffered as a result of working for you.
If the claim is successful, your insurance will pay the compensation, damages, and legal costs.
Do I need employers’ liability insurance?
If you employ anyone, it is a legal requirement to have cover.
The definition of an employee is broad. It includes part-time staff, volunteers, trainees, and apprentices.
In some situations, a sub-contractor may also be legally deemed an ‘employee’.
The only circumstances in which you may not need cover are if the only employees are close family members or if your employees are based abroad.
You should always seek professional advice before making any assumptions about employment status or eligibility for cover.
What happens if I don’t have employers’ liability insurance?
You can be fined up to £2,500 for every day you don’t have cover.
You can also be fined for not displaying your insurance certificate or failing to present one when asked by an inspector.