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A Guide to Employer Liability Insurance
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The majority of businesses that employ people need to take out a form of business liability insurance known as employer liability insurance. It is a legal requirement to have this kind of business liability insurance in place, and if you don't take on even a cheap liability insurance policy, then it could lead to criminal action being taken against you. Given that this kind of policy is a necessary evil, most businesses simply bite the bullet and try to source cheap liability insurance to cover their legal requirements.
Why does a business need employer liability insurance?
If you employ other people, then you have a 'duty of care' towards them. And, of course, you need to protect your own financial situation at the same time. Employer liability insurance simply gives you cover in the event that one of your employees in the course of doing his/her job:
- Falls ill
- Has an accident
Don't just assume that you only need to take out business liability insurance for contracted personnel. This cover may also be necessary for other people who work for you even if they are not under contract, so you may need to check your obligations here. For example, some self-employed workers may actually count as employees for this purpose. And, although some sole traders and people who only employ close family members are technically exempted from having to buy cover, you may still be liable in certain cases so, again, check to see if you do need business liability insurance.
What kind of business liability insurance do you need?
The legally required insurance sum for employer liability insurance is currently set at £5 million. The majority of business liability insurance policy options you will be given, however, will offer higher sums as part of your plan, although cheap liability insurance may stick to the minimum. Industry experts generally recommend that you look at taking out cover for around £10 million.
You also need to obtain a certificate stating that you have this kind of business liability insurance policy in force. This certificate needs to be put up on display somewhere in your business premises. Again, if you don't do this, then you could be liable to criminal prosecution. You also have to keep copies of all your certificates for a period of 40 years after they have expired. This is necessary as employees may make claims years down the line if they develop an illness or medical condition.
Where to buy employer liability insurance?
You can only buy accredited business liability insurance from approved insurance companies, so make sure that the policy in which you are interested comes from a company that meets this criteria (especially if you find a particularly cheap liability insurance policy). You can find a list of approved insurance companies via the FSA (Financial Services Authority).
There are, however, plenty of employer liability insurance policies available from approved insurance companies, so there is no excuse not to shop around for business liability insurance quotes to make sure that you can source cheap liability insurance. Of course, you should not stint on cover here, but you also don't need to pay over the odds for this kind of business insurance protection.
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