Employers’ liability is
the legal liability of an employer to
pay damages to an injured employee or
the representatives of a fatally injured
employee.
Although it is possible to purchase
separate employers liability insurance
policies it is more common to find them
written in conjunction with a
Public Liability
Insurance policy or part of a
package insurance such as
shop insurance
or
combined business
insurance.
The Employers’
Liability (Compulsory Insurance) Act
1969, subsequently amended,
requires all employers carrying on
business in Great Britain to:
-
insure against legal liability for
damages in respect of bodily injury,
death, disease or illness
-
insure with an authorised insurer
-
purchase cover for at least £2
million per occurrence
-
display a valid certificate of
insurance at each place of work.
The Act applies to all employers with
very few exceptions. The exceptions
include:
-
certain
government agencies
-
family businesses where the only
employees are members of direct
family and the business in not
incorporated - it is advisable to
consider cover even in these
circumstances
-
as from 2004, there are allowances
for limited companies where the sole
employee is the sole shareholder in
the business.
The Act imposes a statutory requirement
on an employer to insure against an
employee making a claim for
compensation. The detail of the claim
has to be assessed and for it to be
successful, it has to be proven that the
employer was in some way ‘at fault’ or
in breach of their statutory duty.
The Employers’
Liability (Compulsory Insurance)
Regulations 1998 specified that
-
the limit of indemnity per
occurrence must be £5 million
-
employers’ liability certificates
have to be kept for 40 years after
cover expires
In practice most policies issue in the
United Kingdom are issued with a £10
million indemnity limit. Where a
need for a higher limit has been
identified then additional cover may be
purchased in the form of Excess Layer or
Excess of Loss Insurance.
