When starting a business and taking on employees, there are specific insurances you may need to legally have in place to keep your business and staff protected for any claims.
In this article, Bluedrop Services, specialists in business insurance, look at the most important liability insurances, employer’s liability and third-party liability. Employers’ liability insurance is a legal requirement for business that employ people, it keeps your business and staff protected for any injury claims that occur at work. However, there are certain instances where an injury may be caused by, or happen to, a third-party.
What is employer’s liability insurance?
Employer’s liability insurance protects businesses against claims from injury or illness of your employees as a result of your working for your business. Employer’s liability insurance is a legal requirement for businesses that employ one or more workers in Britain, even if they are on a temporary contract or free of charge as part of a voluntary program or internship.
As an employer who is either a limited company with employees or a non-limited company and have employees who are not part of your immediate family, under the UK employment law, you are required to have employer’s liability insurance.
Not having adequate insurance means you could be fined £2,500 for every day that isn’t covered. You can also receive a fine of £1,000 if you fail to have certificates when asked to provide them.
Why is employer’s liability important?
If you employ people to work for your business, it is your responsibility to protect the health and wellbeing while performing their contractual duties. If one of your employees has an accident due to work that results in an injury, then your business will be held accountable.
Employer’s liability insurance is available to protect your business and assets from any claims. The insurance offers financial cover for legal fees and compensation claims that an employee may bring against your company.
What is third-party liability insurance?
Third-party liability insurance is a form of liability insurance that is purchased to pay compensation for any injuries, damages or loss to a third-party person, such as contracts or a member of the public.
However, if any of your employees injure themselves at work as a result of a third-party, then you are still liable for paying any compensation to your injured employee. This is why third-party liability insurance is important.
Who can a third-party be?
A third-party can be classified as a customer, a client, a supplier or a member of the public who comes into contact with your business. If they become injured or their property is damaged or lost as a result of your business, they could claim compensation.
Do you still need employer’s liability insurance if you have third-party liability insurance?
Yes, these are two different insurances, protecting two separate parties. Employers Liability Insurance protects your employers only, and third-party liability insurance protects anyone that comes in contact with your business outside of the people you employ.
However, there is a cross-over. If, for example, an employee becomes injured by a third party, how do they claim?
Can an employer be liable for the actions of a third-party?
You have a responsibility to ensure your employees have a safe environment to work in. If any of your employees are injured by the actions of a third-party, then you are still liable for paying any compensation.
What about third-party over-action?
If an employee is injured at work and claims compensation from their employer, they can still make a claim against a third-party for their involvement in the injury.
A second claim is something that the employee may or may not win. But due to contractual agreements with the contractor that makes your business liable for all employee injuries, you are still liable for the second claim and not the third-party. This is what is called a third party over action case.
Depending on the situation, the case may be taken to court, which can result in a round of legal fees and more compensation pay-outs should the employee be successful.
There are plenty of other scenarios when third-party liability and employer’s liability insurance cross over, but to keep safe, you should obtain both insurances to protect your business from legal claims.
If you are looking for employer’s liability insurance and third-party insurance, speak to an experienced mortgage broker, who will be able to assist you in your protecting your business.