Insurance is an important part of the risk management system for businesses, whether they are small or big, to protect themselves from unforeseen losses. Of all the different types of insurance policies, Liability Insurance is considered to be the best one as it provides compensation for the claims associated with liability cases. There are three main types of liability insurance – public liability, product liability and employers liability insurance. Here, we will discuss about employers liability insurance.
As a business owner, you are responsible for the health and safety of your employees, while they are on the job. However safe your business environment is, there is always a chance of your employees becoming ill or injured at work. If your employees believe that you are responsible for workplace accidents, they might claim compensation. Therefore, it is very much necessary for you to know about the E.L.I and what it covers in order to protect your business from employees’ claims.
Sometimes, these claims could result in thousands of pounds in workplace compensation. Your business could go bankrupt if you don’t have Employers’ Liability Ins. to cover such claims.
Who requires employers liability insurance
In some countries like the United Kingdom, It is a legal requirement – not an option. Generally speaking, all businessmen or professionals who have employed staff should have employers’ liability cover.
It is compulsory in case of limited companies or if you deduct National Insurance (NI) contributions and income tax from the salary of your employees. Even if you occasionally hire staff, use temporary or seasonal workers, trainees or sub-contractors, you should opt this insurance.
You need to take E.L.I policy when you decide where, when and how someone works. Also when you supply work materials and equipment for them to work.
You need this insurance even if you work from home. It is better to take a combination of Employers’ and Public Liability Insurance policy cover if your customers or partners visit your business.
Your business will be exempted from the E.L.I if yours is a family business, your business is not a limited company and you are the only employee – or if you employ only close family members, yours is a limited company with just one employee – where that employee also owns 50% or more of the issued share capital in the business.
What does employers liability insurance cover
ELI provides you valuable protection against claims of employees who are injured or made ill at work. It meets the cost of compensation for injuries caused to your employees on or off site. It provides financial back up to meet the legal costs of defending a claim made by an employee. Another important benefit of Employers’ Liability Insurance is that your employees will be more secure knowing that in the event of injury or harm, their injuries or losses will be covered by the business.
When can an employee file it against you
Some situations when your employee has the right to file a liability claim against you include discrepancy in the calculation of wages, miscalculation in the number of working hours, occurrence of any work related accident that results in injury or death, illness due to negligence on working environment.
As a smart business owner, you need to take practical steps to make sure that your employees are safe at work. However, you should carry out risk assessment, and be ready with employers liability insurance to protect your business against the risks that might arise from employing people. While choosing employers’ liability insurance, make sure that the policy covers all of your business activities.