Any company, whether it is small or large, having permanent or temporary employees should have employers liability insurance. It is not only necessary but is mandatory in UK according to the Employers Liability (Compulsory Insurance) Act, 1969. This insurance helps the business in covering the unexpected costs that comes from injuries or fatalities of its employees. Especially for small businesses, this is particularly advantageous owing to the extremely high costs of health and safety needs, which when incurred unexpectedly makes it difficult for the business to bear.
The below points discussed will help you know what actually the employers liability insurance covers and why it is important for small businesses.
What liability it covers?
Employers liability insurance covers the costs associated with the injuries or fatal accidents occurred to the employees on site or off site while performing their job. In addition to the medical costs, the lost pay during the treatment period of the employees is also covered. It also covers the legal costs which are incurred due to the lawsuits filed by the employee/his family against the employer for causing injury or death.
How is it helpful for the employer?
Small businesses have limited capital which is not enough to rescue the business out of hardships. The employers insurance cover is an important part of the risk management system of a business. Thus, by having employers liability insurance, small businesses can be assured of timely monetary help at the time of unforeseen financial liabilities. Also, this insurance creates a sense of security among the employees. It also shows that the employer cares for the employees.
What happens without it?
Small businesses have higher chances of going bankrupt if they dont have employers liability insurance. Any employer who runs his business without this insurance, in spite of being aware of the fact that his business may pose potential risk for its employees, is liable for legal prosecution. Moreover, as per the Act, it is also compulsory for every business with reasonable number of employees to have this insurance cover – otherwise the business will be fined.
Small businesses can benefit more:
Unlike large businesses, small businesses will have limited access to financial resources. With this insurance, a small business can easily cope up with the employees claims costs, which sometimes run into hundreds and thousands of pounds. This insurance also helps the small business in building up the reputation, bringing employee satisfaction and being in compliance with the legal laws.
As a small business owner/manager, you may worry about the premiums that are needed to be paid every month/year. Remember, you cannot put your whole business at risk trying to save marginal amount that you are supposed to spend on employers liability insurance.