Employers Liability insurance provides protection to employers from claims made by employees who have suffered injury or ill health due to negligence by the employer
Unlike most other insurance covers, Employers Liability is compulsory if you employ workers based in the UK and failure to carry this cover may result in fines. (There are very few exceptions to this)
Who is classed as an employee?
- Full and part time employees
- Temporary employees
- Labour only Subcontractors
- Work experience
What limit if cover is needed?
Legally you need to have at least £5 million but it is standard for insurers to provide £10 million and depending on the size and nature of your business you may need more.
What if I don’t have cover in place?
Failure to have the cover in place could result in fines of up to £2,500 PER DAY from the Health and Safety Executive (HSE). Failure to display the certificate of insurance or supply it to HSE to inspect when asked can result in a fine of up to £1,000
Are there any Exceptions?
There are a small number of businesses that are not legally obliged to take the cover. These are:
- Health Services bodies
- Some organisations funded by public funds
- Family business that only employ close family members
- Sole employee business – unless contractually requested by clients
- Most public organisations
How is the premium calculated?
Like most policies there are a number of factors that drive a premium and each insurer may put different emphasis on these but for Employers Liability the main factors are:
- The type of business you run
- Your claims history
- Health and Safety and Risk Management that you have in place
What can you do to reduce your premium?
Changing your business and trying to change the history in relation to claims is not something that you can do but one factor you can influence is the quality of risk management and your health and safety.
Implementing a robust health and safety risk management system demonstrates to insurers the commitment you have to risk management and also may result in an improved claims history. Both of which may influence lower rating from the insurers.
Other ways to control your costs
- Thoroughly investigate incidents and accidents immediately.
- Ensure claims are reported immediately. Allowing insurers to act early can man that claims settlement can be reached earlier resulting in lower costs
- Set performance goals for those in supervisory roles.
- Frequently communicate the importance of safety to all staff
- Ensure that safety is a priority and make sure this is visible from the senior management level
- Evaluate incident history and near misses. Look at trends and look to how you can implement corrective action to reduce these
- Look into reward scheme for employees that correctly follow procedures.
What can result in a claim?
Common claims examples are:
- Manual handling accidents
- Falls from height
- Slips, trips and falls at work
- Injury caused by defective equipment/machinery
- Accidents due to insufficient training or supervision
- Repetitive strain injury
- Failure of PPE
Where the claimant and their solicitor can demonstrate a negligence or you have breached you duty of care to the employee then its likely that a claim will be brought against you and your policy will need to react.
Claims example 1
Whilst walking back to her desk from the kitchen after making a hot drink an employee tripped on some raised carpet causing them to fall and break their arm and suffer mild burns. They were treated in hospital and signed off work for several weeks.
The employee pursued a claim against the employer and this was settled in court with the claimant being awarded £20,000 and the court ordering all costs to be paid by the employer. This totalled £100,000!
Claims example 2
An employee suffered life changing injuries when he was working in a motor garage. He was working under a vehicle when the vehicle lift failed and he became trapped under the vehicle. Luckily, another employee working with him escaped with only minor injuries.
The total cost of the claim including damages, future loss of earnings, future care costs, costs of home adaptation and other costs came to £6.8 million!
Impact of COVID-19 on Employers Liability
As the coronavirus continues to impact on all businesses and new variants become more widespread it doesn’t just affect the well being of the general public but also how employers operate and interact with their staff. Also it throws up the question of whether insurance policies will or wont react to claim
There will, understandably, be concern from some employees when coming back into the office or interacting with others and should an employee believe they have contacted Covid-19 whilst at work it can be a worrying and stressful time.
Its important to remember that each claim will be evaluated by insurers on a case by case basis and in some areas it may be easier to see where the incident occurred. So it may be easier to identify when the employee fell ill for a health worker in a care home compared to an employee of a plumbing firm accessing several properties a day.
Its vital that, as employer, you have a process in place for reporting these potential claims and that you investigate them. Not only to see whether the employee has been in contact with someone who has been infected with Covid-19 but also to look at whether there are areas to improve on risk management to protect your employees from future potential incidents.
To further protect yourself and your employees it is good policy to provide robust documentation to all staff reminding them of your policies that relate to their safety. This should include travel and event restrictions, cleaning and sanitation practices, social distancing protocols and remote working.
Employers Liability Tracing Office and Database – ELTO
More recently when you have renewed or taken out Employers Liability insurance you may well have heard brokers and insurers start to ask you for your ERN number (Employer Reference Number). Why though?
As we have seen previously with industrial deafness and asbestosis claims it may take many years for injuries or illnesses suffered at work to become apparent
During that time you may switch insurers, insurers may merge and employees may move onto work at different companies.
The Employers Liability Tracing Office (ELTO) is an independent body formed with the goal of making it easier for claimants who have suffered injury or illness at work to track down the insurers who were on cover at the time of the incident.
The information that relates to the Employers Liability policy is recorded on the Employers Liability Database (ELD) and this central database makes it easier for claimants, lawyer, employers and insurers to track relevant information that may relate to pertinent to a claimant. Prior to this tracing a clients insurance history was difficult and time consuming.
When you first register an employee HMRC will assign you a unique ERN (Employer Reference Number). Often referred to as you PAYE reference number this is normally a 3 digit HMRC office number then a unique number. This ERN Number is recorded against the insurance policy details in place on the ELD and this is updated annually when you renew your cover.
The information provided is only used to help match claimants with the correct insurers and is not visible to the public or used for tax purposes.
For further information or a review of your current cover then contact us on 01204 201800 or email us at firstname.lastname@example.org