Library: Hiscox – Employers’ Liability Act: how it affects business insurance

Executive summary

The Employers’ Liability (Compulsory Insurance) Act was introduced in 1969 and makes employers accountable by law for having a minimum amount of Employers’ Liability insurance in place. Read on to learn more about the act and the legal requirements on business owners.

Don’t overlook the importance of employer liability cover

What is the Employers’ Liability Act?

It’s important to understand there are two acts with this name. Firstly, the Employers’ Liability Act of 1880 was the original law passed that enabled employees to seek compensation for any injuries they suffered due to the negligence of another employee.

Many other legislation types and bills concerning liability in the workplace followed until the Employers’ Liability (Compulsory Insurance) Act was passed in 1969. This legislation made it compulsory for all employers to have a minimum amount of employers’ liability insurance to cover any claims made by employers due to injury or illness.

Key points of the Employers’ Liability (Compulsory Insurance) 1969

The key points of the 1969 Employers’ Liability (Compulsory Insurance) Act include the following:

• Businesses must have a minimum level of insurance of £5 million. You may need more depending on the size of your business, your number of employees, and your industry. For example, construction companies are more likely to operate on ‘dangerous’ premises, where accidents may be more likely to happen. You may take out multiple policies but they must equal £5 million or more.
• Employees must be made fully aware of your company’s employers’ liability policy. The certificate provided by your insurer must be clearly on display at your premises. Alternatively, the certificate can be displayed digitally, but your employees must know how to find and access it. What is the Employers’ Liability Certificate?
• Even with employers’ liability insurance in place, businesses must still carry out risk assessments and take measures to prevent injuries and illnesses. If you do not have the correct measures in place, and your insurer believes a claim has come as a result of this negligence, insurance companies may sue you to meet the compensation costs, the Health and Safety Executive (HSE) explains.

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