Every employer is responsible for the health and safety of employees at work. Its primary task is to create a safe working environment to prevent industrial accidents. Despite taking appropriate preventative measures, the injured party has every right to sue the employer, making them legally liable for the injury if an employee is injured. In such cases, the employer must reimburse the employees for the costs of hospitalization and legal costs. Since accidents are unavoidable at work, it is prudent on the part of the employer to take out insurance that will allow him to cover the cost of compensation.
Employer liability insurance protects companies against liabilities. Let’s talk about this insurance and its benefits.
Who Needs Employer Liability Insurance?
An employer’s liability insurance is mandatory for companies that employ people for their organization. Even if the company only has one employee, employer liability insurance is still required. In Ireland it is mandatory for every company to have employer liability insurance.
Most employers ignore this policy because they think they have no employees. But according to Health and Safety Executive (HSE) Ireland, everyone becomes an employee of an organisation, even if they enter into a contract of service or if the PAYE (pay as you earn) is deducted from their wages or if the employer has control over where and when the employee performs his job.
Exemptions when taking out the policy
While employer liability insurance is mandatory for every business, there are some exceptions. Public entities such as government departments and local authorities, police and health authorities, non-restricted companies that have the owner or his family members as employees, sole proprietorships and partnerships with only one employee, where he owns at least 50% of the issued share capital in the company, are exempt from taking out compulsory employers’ liability insurance.
Coverage level required
By law, every employer must have employers’ liability insurance worth a minimum of £5 million. If the risks and liabilities associated with the business are greater, the business will need more coverage. As many insurance companies automatically provide at least £10 million cover, you don’t have to worry about that.
Each employer receives a certificate from the insurer after purchasing the policy. This copy must be posted in the facility so that it is visible to employees and the same must be available at the request of occupational health and safety inspectors.
Things covered by employers liability insurance
Employer liability insurance covers any claims or liabilities that are likely to come against the employer, such as when an employee has a fatal accident or falls ill while on the job. In general, the insurance covers the costs of the injured person, legal costs and hospital costs.
Benefits of taking the policy
The benefits of taking out this insurance are as follows:
• Complies with legal obligation: Firstly, as employers’ liability is mandatory in Ireland, purchasing it complies with the legal requirement. Otherwise, while failure to take out insurance will incur huge fines of £2,500 per day, failure to present the certificate could result in a fine of £1,000.
• Guaranteed financial security: Insurance from a reputable insurance company protects you by covering a wide range of risks. If you have taken out this insurance, you do not have to worry about any costs if an employee has an accident. Employer liability insurance prevents companies from going bankrupt.
• Financial assistance to employees: this insurance not only saves the employer the amount of compensation, but also enables employees to receive financial assistance in times of need. Taking out employer liability insurance and displaying it in the office gives employees confidence and a sense of security. It assures them that even if something goes wrong, the compensation will help them cover the required costs.
It is advisable to purchase the insurance through a reputable insurance brokerage, who can effectively tailor it to the requirements of your business. Thus, employer liability insurance is important for employers as it not only protects them from borrowing obligations, but also protects the employees by offsetting the expense.