Unlike most other types of insurance, employers’ liability insurance is compulsory. Here we look at what it covers, what happens if you don’t have cover, and how you can help to keep your premiums low.
Employers’ Liability Insurance
Employers’ liability insurance protects employers from claims of negligence made by employees who suffer injury or ill health due to their work.
If you employ workers based in England, Scotland, or Wales (including offshore installations or associated structures), your company must carry employers’ liability insurance to avoid fines.
How Much Cover is Needed?
There is a legally required minimum cover amount for Employers’ Liability cover. However, depending on the size and the nature of your business, the minimum level of cover may not offer your company adequate protection. An experienced insurance professional can help you evaluate your risks and liabilities to determine the right amount of cover for your business needs.
What Happens if I Do Not Have Employers’ Liability Insurance?
The Health and Safety Executive (HSE) enforces the law on employers’ liability insurance. You can be fined up to £2,500 each day you are without suitable insurance. If you do not display the certificate of insurance or refuse to make it available to HSE inspectors when they ask, you can be fined up to £1,000.
What Determines the Size of My Premium?
The size of your premium is based on these factors:
- The type of business you operate (your ‘base rate’)
- Your loss history (the severity and frequency of your past claims and accidents)
- The quality of your health and safety risk management system
Your ‘base rate’ is the starting point used to determine the size of your premium. It is based on the type of business you operate and is calculated using historical claims data for other companies doing similar work. Trades and industries that have a lot of claims and accidents are assigned a high base rate. Industries that have a low number of claims have a lower base rate.
The size of the premium you pay is often higher or lower than your base rate, depending on your loss history and the quality of your health and safety management system. Companies with an excellent loss history and a high quality health and safety risk management system can substantially reduce their premiums, whereas companies with a poor record of safety pay more.
How Can I Reduce My Premium?
It doesn’t make sense to change the nature or scale of your business just to reduce your premium, and you cannot change your company’s past claims history. The one factor you can influence is the quality of your health and safety risk management system. Not only can implementing a robust health and safety risk management system reduce your premiums in the short term, but it may also lead to a reduction in future claims, which will mean lower premiums in future.
Insurers will likely analyse your claims history when underwriting your employers’ liability premium. If you can help control your claims, you can lower your price.
- Investigate accidents immediately and thoroughly; take corrective action to eliminate hazards, and be aware of fraud.
- Report all claims to your insurer immediately. Alert the insurer to any serious, potentially serious, or suspect claims. Frequently monitor the status of the claim, and communicate with the adjuster to resolve them as quickly as possible.
- Take an aggressive approach to providing light duty to all injured employees upon their release from treatment. Supervise light duty employees to ensure their conformance with restrictions.
- In serious cases that involve lost time, communicate with the loss adjuster to demonstrate your interest in returning the injured employee back to gainful employment.
- Set safety performance goals for those with supervisory responsibility. Success in achieving safety goals should be used as one measure during performance appraisals.
- Develop a written safety programme, and train employees in their responsibilities for safety. Incorporate a disciplinary policy into the programme that holds employees accountable for breaking rules or rewards them for correctly following safety procedures.
- Frequently communicate with employees, both formally and informally, regarding the importance of safety.
- Make safety a priority. Senior management must be visible in the safety effort and must support improvement.
- Evaluate accident history and near-misses at least monthly. Look for trends in experience, and take corrective action on the worst problems first.
- Hire a broker to manage your risks.
https://www.turnerinsurance.co.uk/commercial/liability/