Because of various occupational and health and safety legislation if an employee has an accident in the workplace, and they can trace responsibility to their employer, they are able to claim damages in the form of compensation. This compensation will obviously vary depending on the specifics of the case, but often can cost a business many thousands of pounds, and sometimes millions.

An employee that suffers injury in the manner outlined above can still claim compensation even if the company they work for has gone into liquidation. But how are these costs paid, if your business is in no position to afford them?

The answer is with employee liability insurance. Liability insurance is insurance that protects businesses from the cost of compensation. Did you know that the NHS can claim the expense of hospital treatment, expense that’s claimed from your business?

The Employers’ Liability (Compulsory Insurance) Act 1969 (ELCA) makes it compulsory to have liability insurance, valuing at least 5m. Many insurance providers will offer a higher value than this, e.g. 10m. In some situations your business might be exempt from insurance, for instance some family run businesses.

You might be more familiar with public liability insurance. This is like employee liability, except it’s used to protect your business if a claim is made by a member of the public. Both kinds of insurance are important for safeguarding both the claims of employees and members of the public and businesses in the event of a claim.

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