Employers’ liability insurance – who is covered?

THERE is a common misunderstanding amongst business owners that employers’ liability insurance (EL) covers their staff. Likewise, many employees and subbies also think they are covered by EL if they are injured at work.

This is not correct. EL only covers the employer and this is against paying compensation if they are found to be responsible for an employee’s injury or illness. In law, the term ‘employee’ also includes labour-only sub-contractors, office holders and some volunteers.

We are forever hearing, ‘I don’t need personal injury insurance because I am covered at work.’

In reality, the employer is covered and employees and subbies, as a rule, are not. Let’s look at why there is so much confusion around this issue.

People often think that EL is a form of sick pay that will replace somebody’s wages whilst they can’t work through an injury. This is not the case. To receive payment, the injured party would have to take action and claim against the employer. By ‘action’ we mean a written case stating what the employer did wrong and why they are responsible. This will often mean a report and investigation by the Health and Safety Executive – which is never fun. Claims can often take months or years to settle, which is not ideal if there is a mortgage to pay or a family to support.

EL is insurance to defend or settle a claim if the employer is ‘found to be responsible’. So, what does ‘found to be responsible’ mean? There is no exact legal definition as it depends on many things, but the following examples show the complexity of this issue.

Our first example was when a claim against an employer was rejected. Someone was injured by a chainsaw hitting a metal flagpole that a tree had grown around. The flagpole was left from the Queen’s Silver Jubilee celebrations in 1977. The chainsaw hit the metal pole and kicked back, causing a severe injury. Although this went to court, the claim was dismissed because the employer had taken all reasonable precautions to protect their subbie. Here you see that sometimes the risk goes hand-in-hand with the job and the employer could not have anticipated that there would be a metal pole ‘inside’ the tree – hence they were not responsible for the injury.

Simon Wilson.

Conversely, we had a case where the claim was settled. Here an employee was walking around a worksite texting his girlfriend. Concentrating on his phone, he tripped over and lost part of a finger in some machinery. The claim was paid – much to the employer’s annoyance. But why? Surely it was his own fault as he wasn’t concentrating? No, it was the employer’s fault as they did not have a written ‘no mobile phones’ policy. The insurer knew they would lose if it went to court, so they settled beforehand.

This may make your blood boil, but this is the world we live in. Every time you switch on the TV you see an advert asking, ‘Have you been injured at work? Ring Super Bad Solicitors now! Keep limping a bit longer and we will make you rich.’

You may well ask what is the point of having employers’ liability insurance then? Well, it is a legal requirement and not having it is a criminal offence. Yes, criminal. Not a slap on the wrist and the fine for not having EL is up to £2,500 per day.

EL is there to settle a claim if the business is found to be responsible for an injury or illness. Importantly, the insurer will also defend a claim, which in the litigious world we live in, is vitally important. Somebody cuts themselves on a thorn bush and you put a plaster over it. The next thing you know you are being sued for compensation due to the severe lacerations to their arm and post-traumatic stress. Where appropriate, the insurer will automatically defend you.

The solution to the issues raised here comes in two parts:

BETTER KNOWLEDGE

The industry needs to understand who EL covers, hence this article. Additionally, training courses should cover insurance so that everybody has a better understanding of the business side of our industry. Over the years we have discussed this issue with hundreds of employees and subbies. Virtually everybody thinks they are covered at work. Most are shocked when they realise that they are not.

One large forestry/arb contractor argued with me for ages that EL covered his 40 employees. He then discussed this with his insurer and came back and apologised. He had told his team they were covered through work and he was very concerned that he had created a major employment issue. We then advised him on the best way to arrange separate personal injury cover for his staff.

PERSONAL INJURY INSURANCE FOR EMPLOYEES AND SUBBIES

The other essential part of the solution is all employers, employees and subbies should consider personal injury cover. There are various different types of cover available but normally the best type of cover is income protection insurance – specifically tailored for you or your staff, rather than group cover. This enables the insurance to be fine-tuned to specific circumstances, needs and budget.

For further information on this or other ways you can cover yourself or staff, please call 01732 373 864 or visit www.tsins.co.uk.

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