How Much Does Employers’ Liability Insurance Cost?
Employers’ liability insurance is a cost that most businesses in the UK must bear if they have any employees. According to research by insurance site NimbleFins, the employers’ liability insurance cost for a business depends on factors like the number of employees, the riskiness of the work being done and the previous claims history of the business.
Employers’ liability insurance is priced per employee; however, the cost per employee typically gets cheaper and cheaper as the number of employees being covered rises. For example, the first employee could cost £100 to insure, but the cost of insuring 10 employees would be less than £1,000.
Companies engaged in riskier industries will pay more for employers’ liability insurance than companies in safer lines of work. For example, industries like agriculture, forestry, fishing, transport, manufacturing and construction all report higher risks of injuries or even deaths. As a result, businesses in these industries will pay higher premiums for employers’ liability insurance than, for example, an accountancy business or a restaurant.
Previous claims also have an impact on the cost of employers’ liability insurance. When an insurer prices a policy, they take many factors into account. These pieces of information are used to determine the likelihood of a future claim. That’s why the number of employees and the line of work is both critical factors. More employees and more dangerous work both increase the odds of a claim.
In a similar vein, previous claims history can be indicative to an insurer of the odds of a future claim. A business that has faced employers’ liability insurance claims in the past could be more prone to future claims. Perhaps previous claims are a sign that a business is not as careful as it could be. Or that health and safety is not as big a priority as it should be. This could be due to a lack of proper systems or even the attitude of management. Either way, previous claims are a warning to potential insurers.
Therefore, insurance companies will charge more to a business seeking employers’ liability insurance if the business has previously had an EL claim brought by an employee. All businesses should prioritise their workers’ health and safety. In the event of an EL claim, an insurer might look into the health and safety procedures and policies of a business and, if they’re found to be lacking, could come after the business for reimbursement. Having EL insurance is not a replacement for looking after the health and safety of employees.
What is employers’ liability insurance?
Employers’ liability (EL) insurance helps a business pay compensation if an employee is injured or becomes ill because of the work they do for the business. EL insurance does not cover injury or illness claims made by third parties such as clients, customers, passers-by, vendors, and other public members. Those types of claims would be covered by a public liability policy instead. Employers’ liability and public liability are the two most popular types of business insurance in the UK.
It may not be necessary if a business employs a family member or someone who is based abroad. It also may not be needed for certain other working situations, such as hiring a bonafide contractor who is responsible for themselves.
These types of workers typically would provide their tools and materials, work with limited supervision, set their work hours and provide invoices to receive payment. They may also work for multiple clients.
How much employers’ liability insurance do I need?
The minimum amount of employers’ liability that a business must hold by law is £5 million of coverage. This is also known as the limit of insurance. Some businesses will opt to hold a higher level of coverage. This could happen if a business has a large number of employees or if the business is engaged in dangerous work, such as manufacturing, transport or agriculture.
The insurance also must be provided by an authorised insurer. The Financial Conduct Authority (FCA) provides a list of authorised employers’ liability insurance companies on their website. At the time of writing, there were over 800 authorised insurers on the list.
Many of the authorised insurers are accessible only through a broker. Business owners needing to buy employers’ liability insurance can find a broker through the British Insurers’ Brokers Association (BIBA) online broker search tool.