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Employers’ liability insurance: what is it and do I need it?

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At Simply Business, we are hoping for a calmer 2012. But last year highlighted the importance of preparedness – particularly for businesses.

In an increasingly uncertain world, it is vital that you protect yourself on all fronts. Employers’ liability insurance is one of the most important ways in which you can guard your business and its employees against unexpected events – and one of the chief means by which you can maintain your own peace of mind.

What is employers’ liability insurance?

Employers’ liability insurance will help to guarantee the financial security of your business in the event of an accident befalling an employee. This type of insurance is designed to cover the cost of a compensation claim made against you arising from illness or injury suffered by an employee in the course of their work. The policy may also pay for legal costs and miscellaneous expenses such as ambulance transport. These quickly add up, and a claim made against an uninsured business can be financially ruinous.

The benefits of employers’ liability insurance have become even more apparent in recent years. The rise of “no-win, no-fee” lawyers has meant that a much larger proportion of the population now has access to the justice system. While this is obviously a good thing, it has placed uninsured businesses at ever more significant risk. The number of cases brought against employers has increased – and, crucially, lawyers operating under these arrangements fight particularly aggressively to have the employee’s legal costs covered by the employer. A single claim can easily bankrupt a business.

Employers’ liability insurance will continue to protect you many years into the future. Many occupational illnesses take a long time to manifest and, as a result, you may find yourself facing a claim from a past employee several years down the line. You should therefore make sure to keep records of all previous policies wherever possible.

Do I need it?

If you are an employer, you are legally obliged to take out employers’ liability insurance. There are stiff financial penalties in store for firms that do not comply.

Just as importantly, though, employers’ liability insurance is a necessity if you are to maintain your business’s financial stability. A properly tailored employers’ liability policy will help to ensure that you, your firm, and your employees are all properly protected – today and in the future.

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