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Why is Employers’ Liability Insurance Compulsory in the UK?

Many small business owners ask this question, as they struggle with their business start-up and are looking to set up their company with the minimum of investment. If you stop and think about it, having employers’ liability insurance actually protects your business in the event a worker is injured at work, as a claim could run into hundreds of thousands of pounds. If, for example, one of your employees slipped and fell from the scaffolding and injured himself to such a degree that he will need special care and attention for the rest of his life, this scenario would most certainly mean the worker would pursue a compensation claim against his employer.

Protecting Both Parties

While we all do our very best to avoid accidents, they do happen and for both employer and employee, it is imperative to have adequate insurance cover. So important is this, the UK government makes it a compulsory requirement for every registered business that has employees, which ensures that every compensation claim that is successful, there is adequate insurance cover to meet the compensation payment awarded by the court.

Tailored Insurance Cover

Every business is different and the ideal policy for a scaffolder, for example, would be very different to that of an accountant. For the builder working at height is always a possibility and the welder would need to have “hot works” cover, which is specifically designed for those who work with extreme temperatures.

Extremely High Compensation Awards

There are occasions where a court awards a claimant millions of pounds. One example would be a person who fell from a height and ended up paralysed from the neck down. The enormous amount of care that person would require would run into millions of pounds, not to mention the fact that their quality of life is virtually non-existent. This is, of course, an extreme case, but we live in a very uncertain world and in order to have complete peace of mind, one must have adequate cover for such a scenario. Without employers’ liability cover, the business would have to be shut down and the unfortunate worker would not receive anywhere near the amount awarded, as the employer does not have the assets to cover such a high claim. Both parties would suffer and because having this type of insurance is compulsory, this situation would never arise.

Amount of Cover

If you approach a commercial insurance broker and ask what sort of figure should the employee compensation insurance policy be limited to, the answer would be in the millions. A small business might limit their cover to 2 or 3 million pounds, while a mufti-national corporation might extend to 50 or even 100 million pounds. Of course, the premiums would be relative to the amount of cover and for a small business, employer’s liability insurance is affordable and when combined with public liability insurance, the business is pretty much covered for every eventuality.

If you are planning to start a business anytime soon, talk to an established online commercial insurance broker and protect your business from day one.