What is Employers Liability Insurance and Why Do I Need It?

When you're running a business, you've got a lot on your plate. From managing operations to ensuring customer satisfaction, the list of responsibilities is extensive. One crucial aspect that sometimes doesn’t get as much attention is ensuring that you have the right insurance coverage. Among the various types of professional insurance, Employers Liability Insurance is a key piece of the puzzle. But what exactly is it, and why is it so important? Let's dive in.

What is Employers Liability Insurance?

Employers Liability Insurance is a type of insurance coverage designed to protect businesses from financial loss if an employee is injured or becomes ill because of their work. It covers the legal costs and compensation claims that may arise if an employee makes a claim against the business due to work-related injuries or illnesses.

In essence, it is there to cover your business for any liabilities that arise from workplace incidents not covered by other insurance policies. This includes situations where your business may be held liable for an employee's injury or illness caused by the work environment, equipment, or processes.

Why Do I Need Employers Liability Insurance?

1. Legal Requirement: In many countries, including the UK, Employers Liability Insurance is not just a good idea—it's a legal requirement. In the UK, it's mandatory for most businesses that employ staff. Failure to have adequate Employers Liability Insurance can result in hefty fines and legal consequences.
2. Protection Against Claims: Even with the best safety protocols in place, accidents can still happen. Employees can suffer injuries or develop illnesses due to factors at work. If this happens, they might decide to take legal action against your business. Employers Liability Insurance helps cover the costs associated with these claims, including legal fees and compensation pay-outs.
3. Financial Security: The financial implications of a workplace injury or illness can be significant. Legal fees, compensation, and medical costs can add up quickly. Without insurance, these costs would need to be covered out of your business funds, which could have a serious impact on your financial stability.
4. Reputation Management: A workplace incident can affect your business's reputation. Handling claims effectively and showing that you are prepared and responsible can help maintain your business's public image. Having Employers Liability Insurance demonstrates that you are serious about protecting your employees and are prepared for any eventuality.
5. Employee Assurance: Employees are more likely to feel secure and valued when they know that their employer has insurance that covers them in the event of an injury or illness. This can lead to improved morale and productivity, as employees are assured that their well-being is a priority.
6. Contractual Requirements: Some clients and business partners may require proof of Employers Liability Insurance before they agree to work with you. Having this coverage in place ensures that you can meet these requirements and continue to secure contracts and business opportunities.

How to Obtain Employers Liability Insurance

Obtaining Employers Liability Insurance has been made easy by Trafalgar Risk Management Ltd with the ability to add this type of cover to your Professional Indemnity policy. When applying for your policy, the quote shown will be specific to the needs of your company based on the size of your business, the nature of the work, and the number of employees. The policy available through TRM has a limit of indemnity of £10,000,000.

Employers Liability Insurance is a critical component of a comprehensive business insurance strategy. It not only fulfils a legal obligation but also provides crucial protection against potential financial risks associated with employee claims. By securing this coverage, you safeguard your business, support your employees, and ensure that your operations can continue smoothly even in the face of unexpected challenges.

Applying for Employers Liability Insurance

If you already have a policy through TRM, you can add Employers Liability Insurance to your policy at any time throughout the policy period by logging in to your My Trafalgar Portal and clicking the link ‘Change my Cover’.

When applying for Employers Liability Insurance, you'll be asked to provide your Employer Reference Number (ERN). But what exactly is an ERN, and why is it so crucial to include it in your insurance application? Let’s break down why adding your ERN details is not just a procedural formality but a vital part of the insurance process.

What is an Employer Reference Number (ERN)?

An Employer Reference Number (ERN) is a unique identification number assigned to a business by HM Revenue and Customs (HMRC) and is used to identify your business for payroll and National Insurance purposes. It's a key part of your business's payroll records and tax compliance.

Why Include Your ERN on Your Insurance Application?

1.     Verification of Business Identity: Your ERN helps insurance providers verify the legitimacy and identity of your business. It acts as a proof of your business's registration and ensures that the details you provide are accurate and verifiable. This helps prevent fraud and ensures that the insurance policy is issued to the correct entity.

2.     Streamlined Claims Process: In the event of a claim, having your ERN on file helps streamline the process. It allows the insurer to quickly access your business's records and verify details related to the claim. This can expedite the resolution of claims and reduce potential delays in receiving compensation or support.

3.     Building Trust and Transparency: Transparency is key in any business relationship, including with your insurer. Providing your ERN shows that you are open and honest about your business operations, which can build trust with your insurance provider. This can lead to better service and a smoother overall experience.

4.     Facilitating Policy Management and Updates: Your ERN helps insurers manage and update your policy more efficiently. If there are changes in your business, such as adjustments in employee numbers or payroll, having your ERN ensures that your insurer can keep track of these changes and adjust your coverage, if required, accordingly.

If you have any queries, please get in touch with us on trmadmin@trafalgar.uk.com or call 0333 8 000 000.