Businesses fined for employer liability cover lapses

Employers’ liability insurance is required by law if you run a business and have employees under a contract of service or apprenticeship. -Failing to provide essential cover for workers can be costly.

Two firms in Birmingham recently failed spot checks and ended up in court for not having employer’s liability cover.

GMG Car Wash, of Exeter Street, Birmingham, was fined £650 and ordered to pay £500  costs for failing to provide cover.

AE Motors Birmingham, of Florence Street, Birmingham, also faced the same charge and was fined £726 with £557 costs.

Health and Safety Executive Inspector Karen Sweeney stated: “Employers must have employers’ liability insurance in place.”

“Should an incident have occurred at the premises the failure to have insurance would mean that employees may not get any compensation for any injuries or ill-health attributable to their work.”

More than 7,000 workers have suffered injuries and 33 have died in the past five years in motor vehicle repair shops, she added.

What does employer liability insurance cover?

Employer liability insurance covers businesses from compensation claims should an employee suffer a work-related illness or injury.

The law requires employers to have cover of at least £5 million, although the vast majority of UK insurance policies include £10 million, this would also cover defence costs.

However as a business you must have separate motor vehicle insurance in place for road related incidents which is again a legal requirement.

Who needs cover?

Employers must display an employers’ liability certificate in the workplace.

Failing to do so exposes a business owner to fines of up to £1,000 a day –  plus the additional financial burden of settling a compensation claim should the worst happen to a worker.

Most family businesses do not have to provide cover if all the employees are closely related, such as husband, wife, civil partner, father, mother, grandfather, grandmother, stepfather, stepmother, son, daughter, grandson, granddaughter, stepson, stepdaughter, brother, sister, half-brother or half-sister. However it is best to disclose this to your insurer/broker for them to make the decision.

The exemption does not cover limited companies unless the only employee is the owner and they hold at least 50% of the shareholding.

Although businesses do not need to keep out of date insurance certificates, it’s a good idea to bundle them with accountancy records should a claim arise in the future. Some work-related illnesses may take many years to diagnose.

How much does employer liability cover cost?

Like most insurance, the price of employers’ liability cover depends on the risk of several factors relating to a specific business.

These factors include the number of employees, the sort of work they do and the level of cover. However, as previously mentioned, most employment liability policies cover up to £10 million.

The cost can be kept down by providing health and safety protection, like eliminating trip risks and proper workwear.

Find out more about employers’ liability insurance.

Premiums start from £9.33* a month

*Based on £100,000 worth of cover. Plus insurance premium tax (IPT) currently at 12%.