Employers’ liability insurance (ELI) is a vital consideration for many businesses as it provides coverage for legal and compensation costs related to employee injuries or work-related illnesses. In the UK, the Employers’ Liability (Compulsory Insurance) Act 1969 mandates that companies with employees maintain a minimum of £5 million in ELI from a registered insurer. This requirement extends to all staff, including seasonal hires and remote workers.
Before obtaining employers’ liability insurance, businesses should assess their needs, check existing policies for adequate coverage, and conduct thorough risk assessments. Employers are responsible for ensuring that all employees are protected, even in remote settings, while also requiring employees to maintain a reasonable duty of care over their own safety.
Failure to secure ELI when legally required can lead to serious consequences including prosecution. Research by Hiscox indicated that 74% of small and medium-sized enterprises (SMEs) are underinsured globally, which poses risks to future insurability and financial stability.
The cost of ELI varies, typically ranging from £61 to £600 per year per employee, depending on the nature of the work. Higher risks, such as jobs involving heavy machinery or working at heights, attract higher premiums. Companies that demonstrate strong risk management practices can potentially reduce their insurance costs.
Employers must also display their ELI certificate in a visible location and inform employees of its availability. In ambiguous cases concerning subcontractors or freelancers, the extent of control over their work dictates insurance requirements.
Why this story matters
- Understanding ELI is crucial for compliance with laws and protection against potential liabilities that can impact business operations.
Key takeaway
- Employers’ liability insurance protects businesses against claims from employees regarding work-related injuries or illnesses, and compliance is legally necessary for companies with staff.
Opposing viewpoint
- Some small businesses argue that the financial burden of mandatory ELI can be overwhelming, especially when they only have a few employees, leading to a broader discussion about the scalability of insurance requirements.
