Running a small business will probably mean you need to wear different hats on a daily basis. From the many business decisions you’ll need to make as managing director, through to choosing margins and markets as sales director, keeping an eye on profit and loss as finance director and making it all happen as operations director, your roles are many. With your finance director’s hat on, you’ll be keeping a close eye on your outgoings and choosing your business insurance provider will be one of your key considerations.
Let’s be honest, insurance is generally seen as a ‘grudge’ purchase – something you don’t really want to buy, but have little or no choice. But having the right insurance in place can help to protect your business from the unexpected.
Employing people and your insurance considerations
If you employ others, you’re responsible for their health and safety while they’re at work. That’s not just on your premises – it could be carrying out work for your business anywhere else too. If, during the course of their work for you, an accident or incident happened that injured one of your employees, and you haven’t taken reasonable steps to prevent accidents or harm to them, you could be liable to pay thousands of pounds in damages as well as hefty legal fees and expenses to defend the case.
That’s why, in the UK, Employers’ Liability Insurance (ELI) is a legal requirement for all businesses under the Employers’ Liability (Compulsory Insurance) Act 1969, ensuring that you have at least a minimum level of cover for claims made against your company if your employees are injured or become ill as a result of their work for your company. The only businesses exempt from this requirement are those with no employees, and family businesses whose only employees are also close family members. Some public sector organisations are also exempt.
The cost of claims like these can be extremely high, and can be shattering for a business footing the bill on their own. What’s more, failure to carry adequate Employers’ Liability Insurance cover could result in fines and prosecution.
ELI covers any person working for your business, even if they are volunteers or self-employed, and it will pay your legal and compensation costs too.
Employers’ Liability Insurance in the UK – the facts
In a recent independent survey, AXA Business Insurance, one of the UK’s largest business insurers, found that a staggering 53 percent of the UK’s small businesses who employ staff do not have ELI, or they are unaware of the cover.
These figures are even more stunning when you take other results from the same survey into consideration, highlighting that the scope for claims is immense. For instance, out of 2,000 members of the public, 62 percent of UK workers state that they have suffered eye strain after using a computer at work and 28 percent say that they have had pain or ringing in their ears due to a noisy workplace. 36 percent of those questioned said that they have been hurt by heavy lifting at work, and 62 percent have suffered from muscular aches and pains after spending long hours at a desk.
And, also according to AXA, the average workplace injury pay out made on behalf of a small business by the insurers in 2013 was £14,300.
If you choose not to buy Employers’ Liability Insurance
As a business, if you don’t have employers’ liability insurance, according to figures correct at the time of writing, you can be fined up to £2,500 for any day on which you are without suitable insurance. Also, if you don’t display the insurance certificate or refuse to make it available to Health and Safety Executive inspectors when they ask, you can be fined up to £1,000.
Aside from these financial implications, the Health and Safety Executive publish details of businesses that have fallen foul of legislation, so your business reputation could be damaged too.
Of course, not all of your employees’ pains and strains will result in a claim being made against your business, but in reality the findings from AXA show that the scope for claims is high in the UK, and with no win no fee lawyers ready and waiting to help bring claims against businesses, it’s not worth taking a risk.
Employers’ Liability Insurance is neither difficult nor expensive to arrange and for some businesses, it can make sense to buy it as part of a package policy, costing no more than a few hundred pounds. Choosing a package policy also offers the benefits of other covers, such as public liability, business contents, stock and legal expenses.
Your newly formed business and your employers’ liability insurance
Once you’ve registered your business, speaking with an insurance specialist about your employers’ liability needs is essential. Arthur J. Gallagher (UK) is rated a top three UK commercial retail broker according to the Insurance Times Top U Commercial Brokers 2013, and is also the official insurance partner to Formations Company.
Through understanding your business, Arthur J. Gallagher (UK) can help you to choose an affordable comprehensive business insurance policy, with the minimum of fuss and generally with all sale documentation to hand. Call Arthur J Gallagher today on 0845 023 0334 or click here to find out more.
Richard Cliffe is Schemes & Affinities Development Director at Arthur J. Gallagher.
Published Friday January 2, 2015