Employer’s liability insurance is a type of business insurance. It usually comes as part of a business insurance package.
If you employ anyone you’re legally required to have this type of insurance, even if your employees are only employed on a temporary or casual basis.
What does employer’s liability insurance cover?
Employer’s liability insurance covers compensation claims that have been made against you by one of your employees if you’re legally liable to pay compensation because something you did or something you failed to do resulted in them being injured or killed, or resulted in them suffering an industrial disease.
So, if you do something that results in one of your employees being injured, the resultant compensation claim would be covered. However, if you failed to do something such as providing your employee with adequate training or personal protective equipment, a claim resulting from that would also be covered.
As well as covering any compensation awarded, employer’s liability insurance also covers any associated costs and expenses. This includes both your legal costs and the claimant’s legal costs.
In addition to covering your legal costs, your employer’s liability insurer will also handle any compensation claims made against you on your behalf. As well as ensuring the best possible outcome, this also means that you can concentrate on running your business without having to deal with solicitors or potentially complex legal arguments.
Employer’s liability insurance is slightly different to other types of insurance due to the nature of the claims that it covers. As such, it is often described as being a “long tail” type of insurance.
What is long tail insurance?
If your business is burgled and you need to claim because your property has been stolen, usually that claim will be made fairly quickly. Similarly, if you are involved in a road traffic accident, the claim will be made within days of the accident happening.
However, compensation claims can be made up to three years after an injury has occurred. Many claimants do not realise they can claim until they see a “no win, no fee” advert, and that can be some time after the incident.
Some claims can come in even later. If the person who has been injured is under the age of eighteen, the three years don’t start running until their eighteenth birthday. For diseases, the three years start running from when the disease manifests itself rather than when whatever it was that resulted in the disease occurred.
This means that even when you get to the end of the period of insurance, you cannot be sure that no claims will be made against you. The employer’s liability policy that was in force at the time of the occurrence will deal with the claim even if it is no longer in force when the claim is made against you.
The Employers’ Liability (Compulsory Insurance) Act 1969 made it compulsory for anyone who employs people to have employer’s liability insurance. The minimum level of cover is £5,000,000, although most insurers provide £10,000,000 of cover as standard. You can be fined up to £2,500 per day if you are uninsured when required to have this type of insurance.
You are required to display a copy of the certificate of insurance at all of your workplaces. However, an amendment to the legislation in 2008 meant that rather than having to display paper copies of the certificate, it became acceptable to make digital versions available as long as all employees had easy access to the digital certificates – for instance by putting the certificates on your company Intranet.
Due to the long tail nature of employer’s liability insurance and the difficulty some people were having when they tried to trace historic employer’s liability insurers, you are now required to keep copies of your employer’s liability insurance documentation for 40 years.