Employers’ Liability Insurance: Coverage For Your Business and Employees

Building your own business takes a lot of hard work. It is only natural that you want to protect all you have worked for and give your business every chance of succeeding.

With this in mind, you may already have general liability insurance to protect your business against financial loss from claims. However, as soon as you hire employees, you also need a more specific type of insurance.

Read on to learn more about employer liability insurance and why it is essential for your business as well as for your employees.

What is Employers’ Liability Insurance?

Employers’ liability insurance is a type of business cover that can pay out if a claim is made against your business and you need to give compensation for injury, illness, or death.

This type of coverage may sound similar to other insurance policies that you have heard of, but it is important to understand the difference between them.


Employers’ Liability vs Public Liability Insurance

Both public and employers’ liability insurance have to do with compensation for injury claims. But the difference lies in who makes a claim.

Liability claims made by a third party – that is, members of the public like clients, customers, or suppliers – are covered by public liability insurance. This type of insurance covers you for any incident that occurs on your business premises or any accident caused elsewhere by members of your business. For example, if a customer visits your business and falls on a wet floor.

It is not a legal requirement to have public liability insurance. Nevertheless, it’s a good policy for businesses that have regular contact with the public, such as restaurants and shops.

On the other hand, claims made against your business by your employees are covered by employers’ liability insurance. For example, if you run a restaurant and one of your chefs burns their hand on a stove.

This type of coverage is required by law for any business with employees. We will discuss which employees fall under this category later on in this post.


Employers’ Liability vs Workers’ Compensation

Employers’ liability insurance may sound very similar to workers’ compensation, and that is because the two are often included in the same policies.

If an employee sustains a work-related injury, workers’ compensation will cover medical costs and wages lost while the employee recovers.

However, if the employee decides to sue the business, claiming that the company’s negligence caused the injury, then workers’ compensation will not cover the expenses.

That is why your business needs both workers’ compensation and employers’ liability insurance. The latter will cover legal costs in the case of a liability claim, such as paying for a lawyer, court fees, and settlement.

Insurance companies usually offer workers’ compensation policies that include both workers’ compensation insurance and employers’ liability insurance. Such a policy is a good idea for your business, as you can be sure that you are covered for any type of incident.

There are also other types of insurance to cover your employees. These are not mandatory but can be helpful if you want to offer more insurance to your workers.


Does Your Business Need Employers’ Liability Coverage?

By now, you know that employers’ liability insurance is a legal requirement for any business with employees. But if your company does not employ full-time workers, do you still need this coverage?

Here is a quick summary to help you determine whether or not you need employers’ liability coverage.

You Need Employers’ Liability Insurance For:

  • Part-time employees.
  • Temporary staff.
  • Interns or students on work experience.
  • Labour-only subcontractors. They work with your materials and tools and are considered your employees.
  • All employees if you run a limited company.
  • It might not be necessary, but have a policy in place just to be safe.

You Don’t Need Employers’ Liability Insurance For:

  • Independent contractors. This is a bit of a grey area, though, so it is best to get legal advice for your specific situation.
  • Bona-fide subcontractors. They use their own materials and tools and work under their own direction.
  • If you are self-employed, you might want other types of insurance as employers’ liability coverage isn’t necessary.


What Impacts Your Employers’ Liability Insurance Quote?

Every business must have employer liability coverage, and as an employer, the cost for this policy falls to you. It is illegal to ask your employees to contribute to this insurance.

The price of your employers’ liability insurance depends on factors such as the type of industry that you are in, your company structure, and the location of your business.

The salary of your employees and how dangerous their work is will also influence your insurance quote. If you have submitted any workers’ compensation claims in the past, your insurance will cost more than if there have been no previous employee injuries in your business.

It is important to remember that every business is unique, so the policy that works for another company might not be the best for you. Look for an insurance policy that can meet the specific needs of your business.

You can use our website to get started on finding your business insurance quote. Momentum is one South African company that sells an employers’ liability insurance policy.

Final Thoughts on Employers’ Liability Insurance

Understanding the difference between workers’ compensation, employers’ liability insurance, and public liability insurance is crucial. This knowledge can help you determine what is legally required of your business or which policies would be beneficial for you to have.

Protecting your employees is an important part of being a responsible business owner. Unfortunately, accidents do happen, and it is best to be prepared for such eventualities.

A good employers’ liability insurance policy will ensure that your employees are well looked after if something should happen. And it will ensure that your business is protected from financial losses.

Invest in the future of your business today by making sure that you have a solid employers’ liability insurance policy in place.


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