Employers Liability Insurance in the UK
As an employer, you are legally responsible for the safety and health of your employees when they are on the job. If they feel that you are responsible for an injury they have suffered at work, or become ill because of dangerous conditions they were exposed to in the workplace, your employees may seek compensation from you. With this in mind, the Employers’ Liability (Compulsory Insurance Act of 1969 requires that you have least £5 million of insurance cover against any claims they may file.
The role of the HSE
The Health and Safety Executive (HSE)
carries out the laws related to employers’ liability insurance, and their
inspectors have the authority to verify that you have this cover with an
approved insurer. They may also want to examine your certificate of
insurance and other material related to it. You can be fined as much as
£2500 for every day on which you lack the required insurance, and if you
fail to display your certificate of insurance or are unwilling to have it
available for the inspectors, you may also face a £1000 fine.
How to comply with the law
Begin by working with an authorised insurer
that conducts business in accordance with the Financial Services and
Markets Act of 2000. Since the Financial Services Authority (FSA)
maintains a list of authorised insurers, you can verify a company’s status
by clicking on www.fsa.gov.uk, or calling 0845 606 1234.
Doing your part
ethical employer, you will need to complete a risk assessment that is both
relevant and thorough, take all of the reasonable, practical steps you can
to safeguard your workers, and report any incidents that may occur. If the
insurer determines that you have not fulfilled your obligations and that a
claim was filed by one of your employees as a result, the terms of your
contract may permit them to sue your business and reclaim the funds they
have already paid out.
Your insurance certificate
If you purchase coverage or renew your
policy, you will receive a certificate indicating that you are covered by
employers’ liability insurance, stating the extent of the cover, and
listing the companies included under the policy. This certificate of
insurance must also be displayed in a location where your employees have
easy access to it, and the law now allows employers to do this
electronically. This is a viable option, but it can only apply in a
situation where every employee uses a computer when they are at work, or
if an employee works at an offshore installation and would like to see a
copy. In the latter case, this should be provided quickly, and definitely
within 10 working days.
Your covered employees
The law requires you to purchase employers’ liability insurance for those who are employed under a contract of apprenticeship or service, and this contract may be written, verbal, or implied. The key here is the type of relationship you have with those who work for your company and the amount of control you have over their work activities. You should also consult with your insurer if some workers seem to fall into a “gray area,” if the level of risk is heightened for a certain group, or if the work they perform for you varies from your company’s usual type of business.
Your insurer’s obligations
They have to pay the full amount of
compensation that was awarded to your employee by the court, or agreed
upon by that individual, and they cannot impose any restrictions that
would make your company, your employee, or a former employee pay for any
part of it. At the same time, you can freely agree to reimburse your
insurer for part of the amount they have remitted to your employee because
of a liability claim.
Remember that every insurance policy is different. ALWAYS read the policy carefully to make sure that it has the right cover for you!
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