Certain industries tend to have higher rates of workplace injury or illness, and insurance premiums will often reflect these risks accordingly. For example, a construction site may face different insurance costs than an office-based business due to the nature of the work and associated hazards.
In this post, we’ll walk you through two hypothetical scenarios of employers' liability claims. In the first example, the business is covered by Employers' Liability Insurance, whereas in the second, they are not, leading to severe financial consequences.
The Importance of Employers’ Liability Insurance for All Types of Employees
Employers' Liability Insurance is often a legal requirement for any business with employees, whether they’re paid, unpaid, volunteers, or subcontractors. Failure to maintain this coverage can lead to steep fines and even jeopardize your business operations.
Case Study 1: Protected with Employers' Liability Insurance
In an office setting, an employee returns to her desk after making a hot drink in the kitchen area. While walking across the office, she trips on a loose carpet, falls, and breaks her arm, spilling her hot drink in the process and sustaining mild burns. Following this accident, the employee requires medical treatment and takes several weeks off work. During her recovery, she files a claim against her employer, alleging that the carpet was hazardous and should have been fixed.
The employer attempts to argue that the carpet had only come loose that day. However, when the claim reaches court, the judge rules in favour of the employee, awarding her £20,000 in compensation for her injury, lost wages, and additional costs. Furthermore, the employer is held responsible for covering all legal fees, including those of the claimant.
Thanks to their Employers' Liability Insurance, the total costs, which exceeded £100,000, were covered by the policy, allowing the business to continue operating without financial devastation.
Case Study 2: The Costly Consequences of Being Uninsured
In another example, a small electrical firm employs four workers, two of whom perform essential maintenance work. One of these workers is a new apprentice who, due to inexperience, fails to earth the electrical circuit he’s working on, resulting in an electric shock that causes minor burns. The apprentice then needs time off to recover, during which he files a claim against the employer.
The employer disputes the claim, arguing that the apprentice did not follow the necessary safety procedures. However, in court, it’s determined that the apprentice had not received adequate health and safety training, and the employer is ordered to pay £17,500 in compensation for the apprentice’s injuries and lost income, as well as all legal fees.
Since the employer had not arranged Employers' Liability Insurance, he is personally responsible for covering the entire amount. The financial burden doesn't end there. The business had been uninsured for over 300 days, resulting in additional fines of £2,500 per day without coverage. The combination of court-ordered payments and HSE fines forces the business to close, highlighting the potentially devastating impact of operating without Employers' Liability Insurance.
Protecting Your Business with Employers’ Liability Insurance
Having Employers’ Liability Insurance means safeguarding not only your employees but also your company’s future. With the right coverage, you can focus on growing your business rather than worrying about potential claims or penalties.
