Employer’s liability insurance is a legal requirement for any salons that employ people. It’s also important because compensation claims can be expensive to settle, with some claims costing over £250,000.
So, what does employer’s liability insurance cover, and how do you make sure you comply with the legal requirements?
What does employer’s liability insurance cover?
Employer’s liability insurance covers any compensation claims made against you by your employees if they’ve been injured or fallen ill due to something that you’ve done or failed to do. As well as covering any compensation awarded, this type of salon insurance also covers and associated costs and expenses.
Even a relatively minor injury can result in a compensation claim that costs over £1,000. Serious injuries can result in substantial compensation awards. It is not worth risking trading without if because, in the event of a compensation claim being made against you, the financial cost to your business could create serious issues.
As well as covering any compensation awarded against you, employer’s liability insurance also covers any legal costs that are incurred as a result of the claim. These legal costs can soon mount up, particularly in the event of a serious injury or where the case made against you is not completely clear-cut.
Importantly, your employer’s liability insurer will also have a team of trained claims handlers who will handle the claim on your behalf. This means that you wouldn’t need to worry about the potentially complicated legal arguments that can be involved when a compensation claim is made.
The fact that your insurance company will be handling the compensation claim on your behalf also makes it more likely that there will be a satisfactory outcome. This means that your future premiums are kept reasonable because compensation claims are only paid if you are legally liable.
What are the legal requirements?
You’re required to have employer’s liability insurance if you employ anyone, even if you only employ people on a part-time, casual or temporary basis.
If you don’t have employer’s liability insurance, there are heavy penalties. You can be fined up to £2,500 for each day that you don’t have it.
The legal requirement is for your insurance to have an indemnity limit – the maximum amount the insurance company will pay in the event of a claim – of £5,000,000. However, most insurance companies offer £10,000,000 as their standard indemnity limit.
You are also required to display a Certificate of Employer’s Liability Insurance and to keep copies of the certificates.
The certificate of employer’s liability insurance
By law, you are required to display a Certificate of Employer’s Liability Insurance to show that you have this type of insurance. Even if you are insured, you can still be fined if you fail to display the certificate.
Originally, you had to display a paper copy of the certificate, but now you are allowed digital copies, so long as they are provided in a place where all your employees can view it, like a company Intranet in an office. However, as a salon, it makes much more sense to have a paper copy pinned up in the break room, as its unlikely you’ll have a system like this in place.
As mentioned, employer’s liability insurance covers compensation claims for diseases as well as injuries. Compensation claims for diseases can be made many years after whatever caused the disease happened. As a result, you’re required to keep copies of your Certificate of Employer’s Liability Insurance for at least 40 years.
The Certificate of Employer’s Liability Insurance must show:
- the name of the insurance company that issued the insurance
- the name of the policyholder
- the policy number
- the period of insurance
It must also contain a statement to the effect that the insurance complies with the law and be signed by the insurance company’s chief executive.