Business Liability Insurance

Employer's Liability

If you are an employer in the UK, you are responsible for the health and safety of your employees while they are at work.

Therefore Employers' Liability insurance is compulsory.  The Government introduced The Employers' Liability Compulsory Insurance Act 1969 to ensure that employers have at least a minimum level of insurance cover against claims from such employees, should they seek compensation following injury or illness as a result of their work.

Following the introduction of the Employer's Liability (Compulsory Insurance) Regulations 1998, the minimum level of cover is £5m but most policies provide an automatic level of £10m.

The Health and Safety Executive enforces the law on Employers' Liability insurance and their inspectors will ask to see your Certificate of Insurance and other insurance details. (A copy of the current certificate must be displayed where your employees can easily read it).  Faliure to do so, may result in a fine.  You can be fined if you do not display the certificate of insurance or refuse to make it available to a Government Health & Safety Executive inspector when requested.

The 1969 Act termed an employee as "an individual entered into works under a contract of service or apprenticeship with an employer".  Today, Employers' Liability policies actually provide wider cover than this, for example, most policies will indemnify employers where they are deemed responsible, for hired-in people or those working on a work experience scheme.  The question of where liability rests in such cases can still be open to debate.

Employers' Liability policies cover injury that is caused during the period of insurance.  Consequently, when injury or disease manifests itself years after the original cause, for instance an industrial disease, there is a need to identify the Employers' Liability insurers from way back.

This can cause difficulties for the claimants especially if the employer is no longer in business or have not been retained by them.  Employers following the 1998 Regulations are now required to retain for 40 years any certificate of insurance issued to them.

Group companies, which are parent companies and their subsidaries, are still viewed as a single employer and can therefore be insured under the same cover, but EL Certificates must clearly state which subsidiaries are covered and specify their names.

Associated companies cannot be insured by the same EL cover and must be insured separately because they are separate legal entities.

Public/Products Liability

Unfortunately, we live in litigious times.  Businesses can be sued, rightly or wrongly, for seemingly vast damages over a whole series of complaints. 

Insurance can protect a business from this.  It can't stop people suing or winning their cases, but it can deal with the financial consequences.

When your business involves contact with the general public you need Public and Products Liability cover.  This covers injury to third parties (not staff) or damage to their property.  This could be someone tripping over a cable or a worker causing a leaking pipe or an electrical failure.

It's not unknown for damages to reach over a million pounds in public liability cases.  Insurers sell cover based on the limit of liability the business needs.  The minimum cover is usually £1m but it is possible to arrange cover for £10m or more.

Special cover for liability tends to follow specialist trades and activities.  Make sure you have a liability cover that takes account of what you do.

Product Liability

Product Liability is you legal liability to pay damages consequent upon a defective product being used in the contract.

Products Liability insurance is a little more specialist.  Businesses that supply products to other businesses or the public, from software to machine tools, are at risk if a faulty product causes damage or injury.  Manufacturers of a product are usually liable if things go wrong, but the liability can fall on a supplier if the maker of the product is no longer in business.

Professional Services

For businesses that deal in services, professional indemnity cover will be more appropriate.  This provides protection against any action by clients who believe they received bad or negligent advice, and incurred a loss as a result.

Most professional bodies have professional indemnity cover, in some cases it is compulsory.  Anyone who supplies advice or services such as consultancy should consider professional indemnity, if only for their own peace of mind.