Why is employers’ liability insurance important?

What is employers’ liability insurance?

It’s an insurance policy that protects your business should you be sued by a current or former employee for an illness or injury suffered as a result of working for you.

The definition of ‘employee’ is broad. It includes part-time staff, trainees, volunteers and sometimes even sub-contractors.
If you only employ close relatives or workers based oversees, cover may not be needed.

Why is employers’ liability insurance important?

It’s a legal requirement if you employ anyone. You can be fined £2,500 for every day you don’t have it.

Without cover, you may find that other businesses will be reluctant to sign a contract with you. People may also not want to work for you.

What are the risks of being sued?

There is always a chance that something could go wrong.

Sometimes this can be minor, such as an employee tripping over equipment and twisting an ankle. It could also be much more serious, such as an employee developing a life-threatening illness after working with hazardous materials.

What is the likely cost of a successful claim?

The exact amount awarded will depend on the individual circumstances, including the particular injury or illness and the effect it as had on the employee.

Claims will often also include an element of compensation: not just for the injury or illness, but for lost earnings, medical costs, incidental expenses incurred and legal fees.

The result could be a claim for thousands of pounds. In a more serious case, awards may add up to hundreds of thousands of pounds, which will have to be paid by your business.

If your business is unable to pay, it could mean not paying contractors, suppliers and staff and could even result in bankruptcy.

Is it important to employees?

The fact you have employers’ liability insurance sends an important message to workers. It shows they are valued and that you are a responsible employer. This can go a long way towards building employee loyalty.