Employers’ Liability Excess – How Much is Enough?

By law, businesses who have employees, including volunteers, apprentices and labour-only contractors need to have Employers’ Liability insurance with at least £5m in cover. But in reality, many insurers will offer £10m as standard.

So what’s the correct amount? Rollinson Smith Insurance Brokers shed some light on why the legal benchmark may be woefully inadequate when it comes to a claim.

The 1998 amendment to the Employers’ Liability (Compulsory Insurance) Act of 1968 requires all business with staff, be they paid or unpaid, to have Employers Liability in place, with £5m being the bare minimum.

Not having this cover can lead to a daily fine of £2,500 at day. It sounds like a lot but is a drop in the ocean compared to how much a business owner may have to overpay if they don’t have enough coverage on their policy and have to make up the difference in the event of a claim. This scenario could cost not just tens of thousands, but rather millions.

Certainly, there are those in more high-risk industries such as construction who may be well aware of the need for increased Employers’ Liability, while sectors who deem themselves to be less susceptible may be equally in danger of a big claim due to complacency.

While insurers regular arrange Employers’ Liability insurance for £10m as standard, this can be covered for more where needed.

Here are some examples of how Employers’ Liability can be increased based on business size, type and turnover. These are based on the maximum number of staff working at any one location as shown below.

The Hotel

Turnover: £1.2m
Number of staff employed: 8
Standard level of cover offered: £10m

If it is considered that £10m may not be enough, excess cover can be purchased and an additional £5m would cost in the region of £500 plus IPT.

The Audio Visual Installer

Turnover: £8m
Number of staff employed: 20
Standard level of cover offered: £10m

If it is considered that £10m may not be enough, excess cover can be purchased and an additional £10m would cost in the region of £1,000 plus IPT.

The Building Contractor

Turnover: £12m
Number of staff employed: 40
Standard level of cover offered: £10m

If it is considered that £10m may not be enough, excess cover can be purchased and an additional £15m would cost in the region of £1,500 plus IPT.

The above illustrates just how much can be covered to prepare businesses for difficult circumstances and how excesses can be flexible to meet the demands, turnovers, and workforce of each.

Speak to our experts at Rollinson Smith Insurance Brokers, who can help you determine the level that’s right for your business, based on the risks you might face in the future.

For a no obligation chat, call 01952 607600 or email info@rollinsonsmith.co.uk.