In case you are operating a business then there exist some chances that your employees might get injured, or suffer from illness as working for you, then you might just need an employers’ liability insurance. Therefore, as a matter of legal duty, it’s your responsibility to protect the safety of your employees at work.
Types of insurance needed by a business owner:
Before, starting with the employer’s liability insurance. Let us first see the types of insurance a business might need:
- General liability insurance
- Professional liability insurance
- Worker’s compensation insurance
- Property insurance
- Commercial auto insurance
- Health insurance
1. General liability insurance
General liability insurance includes claims of physical injury which is made to a third party, personal injury to a third party, property damage, etc. it is essential for protecting your business.
2. Professional liability insurance
Professional liability insurance helps your business to protect it against claims of negligence which are specific to your line of work. It is also known as errors and omissions insurance.
3. Worker’s compensation insurance
Worker’s compensation insurance covers the wages, medical payments, and rehabilitation costs for workers who are ill or suffering from any illness or are injured on the job.
4. Property insurance
Property insurance covers you against the replacement costs for loss of equipment, inventory, etc as well as furniture in case they are damaged or destroyed by a storm, fire, or theft. In case you work from home, then your home insurance policy doesn’t provide you in full for your business. Thus, you need a separate policy.
5. Commercial auto insurance
Commercial auto insurance is almost the same as any other vehicular insurance. You will be needing it in case you or your employee are on the roads for your work.
6. Health insurance
Health insurance is a general insurance which is provided by every employer to its employees providing for worker’s health expenses which includes doctor visits, medications, and surgery.
What is the employers’ liability insurance?
Employers liability insurance acts as a legal requirement which can be in the form of a certificate or legal document that is issued from your insurer, and it is required by every business owner. The employee benefits liability coverage insurance policy covers the cost of compensation which an employee incurs in case of an injury or illness as working for the company.
Moreover, it also covers the cost of compensation, that includes the cost of the claim and legal expenses which are incurred by the business whilst defending the case. Employees also have an option to sue or file a lawsuit for additional damages in case they believe that the employer’s negligence caused the issue. And, employer’s liability coverage will pay for legal expenses, such as:
- Attorney’s fees
- Court costs
- Settlements or judgments
So, we can say that an employer’s liability insurance basically helps your company survive a negligence
lawsuit curtailing from employee illness or injury.
When Do I need employers liability insurance?
In case you have contracted employees then you might get yourself a employers’ liability insurance. If employees don’t have an adequate liability cover then they can be fined up to £2500 a day. Though, there exist some other occasions that are exempt but, the occasions vary depending on the nature of the work, and the relationship, as well as the contract between you and the staff members.
Thus, Employers liability insurance is needed in case:
- The equipment, materials and/or the work premises are owned by you.
- You are paying national insurance for any of your staff members.
- You maintain control of where and how the staff members perform their work.
- They work under similar conditions and treatment to another member of staff who is covered by the insurance.
Staff members who do not need employers liability cover are:
- You as you are the business owner
- Close family members
- Unpaid workers
- Some independent contractors or non-exclusive workers
What does Employers Liability Insurance cover?
Employers Liability Insurance despite having some exclusions covers the following:
- Employees who have opted out of workers’ compensation benefits: As in most of the state’s employers are required to obtain workers’ compensation for their employees. But there exist some states that allow workers to opt out of it. As the employees would be allowed to sue their employer if they got injured on the job.
- Employees in some industries not covered by workers’ compensation: Here, the employees refer to seasonal workers, agricultural workers, domestic workers, railroad workers, and longshoremen.
- Employees who have fallen ill with a disease which may be unconnected to their employment: As Workers’ compensation covers workers for only “occupational diseases”. Therefore, some other diseases which may include ordinary diseases like cancer or the flu which are not caused by the employee’s work. So, the employee can sue the employer for damages in case the disease is not covered by workers’ compensation.
Moreover, there also exists some lawsuits that are covered by Employers Liability Insurance.
What types of claims does an employers liability insurance cover?
Employers’ Liability Insurance covers the following types of lawsuits or types of claims:
- Third-Party-Over Action
- Loss of Consortium
- Consequential Body Injury
1. Third-party action
As a matter of legal terms, the employee who has been injured or fallen ill on the job has no right or cannot sue the employer. But the employee can sue the third party, who in the case can sue the employer, conditional to the employer’s insurance contractual obligations.
2. Loss of Consortium
the spouse or family member of an employee can file a lawsuit against the employer, in case an employee has been seriously injured or killed on the job. They can file a claim for under a “Loss of Consortium” lawsuit? Though the loss is not a tangible economic loss, but a compensation for the love, companionship, and other benefits associated with the person.
In case the employer and the employee are having more than one relationship. And this relationship typically applies to manufacturers. An employee of a manufacturing company has been injured is liable to collect the workers’ compensation benefits as well as file a lawsuit against the employer as a manufacturer, but not as the employer.
4. Consequential Body Injury
It basically refers to consequential damage. And a spouse or the family member can sue the employer for injuries which the employee has sustained as a consequence of the employee’s injury.
Key exclusions of employer’s liability insurance:
Though Employers’ Liability insurance is compulsory, and any policy exclusions are not permitted.
But Employers’ Liability insurance cover may be limited as part of the underwriting process and by simply applying some clauses which are as:
- Restrict the definition of the ‘business’;
- Exclude certain kinds of work;
- Exclude certain machines and/or processes.
Moreover, the policy also excludes liability for injury to employees while travelling in a vehicle, or while being using any vehicle on the road. As this will be covered under Motor Vehicles Insurance.
What is the difference between the Employers’ Liability Insurance and the workers’ compensation?
Workers’ compensation covers you against the medical expenses and lost wages of an employee who has suffered a work-related illness or injury. An employee should not sue an employer in case of any injury or illness in order to receive workers’ compensation benefits. Here, the employee will receive the workers’ compensation benefits. And in any case, an injured employee sues the employer for any damage which is not covered under the workers’ compensation then the Employer’s Liability Insurance will cover all the defences costs as well as all the settlements against the employer.
What is the difference between the Employers’ Liability Insurance and the employment practices liability insurance?
Employment practices liability insurance is there to provide all the financial protection for your business depending upon the different types of lawsuits by employees. It covers lawsuits by employees which are for wrong doing related to their employment such as wrongful termination, discrimination, harassment, retaliation, etc.
Employment practice liability coverage provides coverage to employers against claims which are made by employees contending to: Discrimination, Wrongful termination. Harassment.
Whereas, Employers’ Liability Insurance covers you against the lawsuits filed by employees in case of illness or injury to the employee.
How much does workers’ compensation insurance cost?
The workers’ compensation insurance is regulated on the state level. Therefore, the cost of workers’ compensation insurance policy depends upon the location of your employees. So, the cost of workers’ compensation depends on the following factors:
- The state(s) where your employees work
- Your annual payroll
- Your industry
- The type of work done by your employees
- Your claims history
What is an employers’ liability insurance certificate?
An employers’ liability insurance certificate basically refers to a document from your insurer which shows or acts as a proof that your company has employers’ liability insurance. the level of cover, as well as the details of the insurance and the insurer, are mentioned in it. Employers are legally bound to show the employers’ liability insurance certificate to the employees.
What is included in the employers’ liability certificate?
The employers’ liability certificate should possess the following:
- The level of cover: The level of cover specifies the maximum amount which the insurer will pay out for the claim. You should have at least £5 million of cover as per the laws.
- The company covered: The name of the company (or companies) should be clearly shown in the employers’ liability certificate.
- Name of insurer: the name of the insurer providing the policy should be mentioned in the certificate as well as it should be signed by a representative of the insurer.
Things to consider when you are buying employers’ liability insurance:
- Be honest
- Be thorough with the terms & conditions
- Consider the risks
How workers’ compensation claims work?
The employer should be immediately informed about the workplace injury or occupational illness of an employee. As the companies have different Reporting periods, and in case the Reporting periods are over then the employee will not be able to receive the benefits.
Though, when an injury or illness is reported by the business, they should take the following steps:
- Visit an approved healthcare professional
- Start the claims process
- File the claim
- Receive benefits
- Return to work
1. Visit an approved healthcare professional:
Medical assistance should be immediately provided as any delays can put their health and benefits at risk. And in order to file the employee’s injury claim the doctor should provide the medical report.
2. Start the claims process:
The appropriate forms, information as well as the contact details for the business’s insurance company and other relevant details should be provided on order to start the claim process and file the claim.
3. File the claim:
The employee should file the claim as well as pay attention to reporting deadlines, when filing the claim with the employer’s insurance company. the state-mandated paperwork, forms, and medical reports should be mentioned in the claim.
4. Receive benefits:
When the claim is provided and approved by the insurance provider then the employee will start to receive workers’ compensation payments. Where the benefit of workers’ compensation payments include coverage for the employee’s medical expenses, rehabilitation costs, and two-thirds of their wages as the workers are medically unable to work.
5. Return to work:
On the recommendation of the physician, the injured employee can return to work. The employers should make reasonable accommodations as well as provide any necessary safety training afterwards and to other employees as well to make sure that the injury doesn’t happen again to any other employee.
There exists number of ways in which the employees who are already covered under the workers’ compensation can sue your business in case of any illness or injury on the job. it is not only the employee alone who can claim for the damages but, also their spouse and other family members. So, the Employers’ Liability Insurance covers you against the various lawsuits including third party which includes loss of consortium, dual capacity, and consequential bodily injury; as well as the defence costs, court costs of various lawsuits.
Employers’ Liability Insurance basically protects the businesses from the consequences of employee injuries and illnesses.