Who needs Employers’ Liability Insurance?

Employers’ Liability (EL) is a legal requirement for many businesses, but there are several exemptions. It is important that EL cover is in place if it is required.

Why might EL be needed?

Employers’ Liability is one of the few classes of insurance which is compulsory by law for many entities. It’s important that insurance professionals and their clients are aware of who the law is applicable to and why.

Employers are responsible for the health and safety of their employees whilst they are at work. If an employers’ negligence or breach of statutory duty causes injury or illness to their employees, then they could be held liable for compensation costs.

The Employers’ Liability (Compulsory Insurance) Act 1969 means that it is against the law for the majority of employers to trade without the necessary employers’ liability insurance. The legal limit of cover required is £5 million, although the most common limit provided by insurers is £10 million.

To be exempt from the act, employers must meet at least 1 of the following criteria:

• – Companies employing only their owner where that employee also owns 50% or more of the issued share capital in the company.
• – Family businesses, i.e., all of your employees are closely related to you (as husband, wife, civil partner, father, mother, grandfather, grandmother, stepfather, stepmother, son, daughter, grandson, granddaughter, stepson, stepdaughter, brother, sister, half-brother or half-sister). However, this exemption does not apply to family businesses which are incorporated as limited companies.
• – Most public organisations, including government departments and agencies, local authorities, police authorities and nationalised industries.
• – Health service bodies, including National Health Service trusts, health authorities, primary care trusts and Scottish health boards.
• – Some other organisations which are financed through public funds, such as passenger transport executives and magistrates courts committees.

At Air Risk Solutions, we can offer comprehensive Employers’ Liability cover alongside our Public Liability policy. The policy is underwritten by Aviva and a range of different trades can be considered.

Further information about employers’ liability can be viewed on the following document provided by the Health and Safety Executive: Employers’ Liability (Compulsory Insurance) Act 1969: A guide for employers HSE40.

Any questions? Contact us.