Employers' liability insurance

[TommyGG]

I've been told as a Ltd company by law we are required to have Employers' liability insurance. Is this true if the only two people working at the company are Directors?

 

[urban33ltd]

I am afraid it is true, it isn't a lot of money when you don't have to many staff, plus if you have any other business insurance it sometimes comes within that policy.

 

[TheGuru2010]

The only way a limited company would not need employers liability would be-

If the limited company only employed one director (no other staff at all) & that director owns 50% or more of the share capital.

So in your case yes your would need employers liability. Employers liability is usually bolted onto public liability policy.

They start fairly cheap no but does depend on the trade your in. Its well worth setting some time aside for this & making sure you get whats best, there may not be much price difference in a off the shelf package to the PL & EL policy.

Check every scenario & always be sure to keep on top of your insurances as the business changes

 

[PolicyBee_Vicky]

Hi Tommy

Here's a snippet from a guide we put together, which you'll hopefully find helpful. It covers most of the bases. The full blog piece is on our website if you wanted to have a gander. (I can't post a link here unfortunately).

Vicky

"
Who needs it?
Well, because the policy wording uses a really broad definition of ‘employee’, it’s safe to say that most businesses in the UK probably do. To ensure as many people as possible are covered, ‘employees’ aren’t just limited to permanent full or part-time members of staff under contract. They don’t even have to be paid.
Volunteers, work experience kids, secondees, temps, helpers, apprentices, staff borrowed by you and labour only subcontractors under your supervision are all classed as employees. Don’t fall into the easy trap of thinking that because they’re not really ‘your’ staff, they’re not really your responsibility. They are – and so is their welfare.
Apart from publicly funded organisations, the only businesses that don’t need employers’ liability insurance are:

• Companies where the owner is the sole employee, owning 50% or more of the issued share capital.
• Family businesses not incorporated as limited companies where all employees are closely related to the business owner (for example father, son, brother, sister, husband, wife etc)."

 

[TommyGG]

Ok thanks for your help! Just to be clear, it's just me and my brother who are joint directors with a total of 90% shareholding and we are required to have this?

 

[TheGuru2010]

Hi,

Yes you will require Employers Liability, what business are you in ?

 

[PolicyBee_Vicky]

Hi Tommo

Yes, that's right.

 

[TommyGG]

We make software and sell it online, we work from home at the moment.

We sometimes hire people on very short contracts as well but are about to hire someone in Brazil for a 6 month contract to do graphic design work

I'm a bit embarrassed I didn't know about this, is there a sheet somewhere of our legal responsibilities like this?

I've just got one quote, £20p/m is this reasonable? Edit, AXA seem to do it for £12 p/m so I think that seems OK

 

[PolicyBee_Vicky]

Hi Tommo

It will come with public liability insurance too (do you currently have public liability insurance?)

Let me know if you'd like a chat - I believe the PL&EL insurance we arrange comes in from aroung £13 a month.

Vicky

 

[internetspaceships]

We make software and sell it online, we work from home at the moment.

We sometimes hire people on very short contracts as well but are about to hire someone in Brazil for a 6 month contract to do graphic design work

I'm a bit embarrassed I didn't know about this, is there a sheet somewhere of our legal responsibilities like this?

I've just got one quote, £20p/m is this reasonable? Edit, AXA seem to do it for £12 p/m so I think that seems OK

You're also wise to look at product liability cover too if you design and sell software.

 

[TommyGG]

"Product liability insurance

In product liability insurance terms, a product is any physical item that is sold or given away."

Doesn't seem to be relevant for software? Also, and damages arising from using our software are surely covered by our warranty.

 

[internetspaceships]

Ok, a multi million pound Company A acts upon your recommendations and installs your own software.

As a direct result of this they cannot operate in some way correctly for a period of two weeks. They come to you for compensation, so what's your game plan at this point?

There's also professional indemnity cover needed in here too now I read it back.

 

[TheGuru2010]

As internetspaceships has correctly pointed out, you need a professional indemnity package (you can add on the P/L & E/L with that).

Should someone install your software which corrupts there system etc etc you ARE liable for that.

I would not sell any software until you have the professional indemnity in place.

Speak with a good broker & advise them of everything that the business does / gets involved with. They should provide a good recommendation of requirements.

 

[TheGuru2010]

Hi Tommo

It will come with public liability insurance too (do you currently have public liability insurance?)

Let me know if you'd like a chat - I believe the PL&EL insurance we arrange comes in from aroung £13 a month.

Vicky

Vicky,

No offense meant by this but Policy bee state they do professional indemnity insurance & you did not pick up from his last post that this would be required?

You must bear in mind the information you give out, people will take this information & act upon this.

Please double check before posting.

 

[lockyer]

AXA do a cracking "cheap as chips" PI, PL & EL product buts its only available through brokers not direct.

If your local broker can't help, drop me a pm and I'll rustle a quote up for you

 

[PolicyBee_Vicky]

Vicky,

No offense meant by this but Policy bee state they do professional indemnity insurance & you did not pick up from his last post that this would be required?

You must bear in mind the information you give out, people will take this information & act upon this.

Please double check before posting.

Hi Jamie,

I wanted to answer Tommo's original question about employers' liability (EL) insurance (as this is the only business insurance apart from commerical vehicle required by law) - and to buy EL insurance it's highly likely you'll have to buy public liability insurance too.

You're completely right about looking into professional indemnity insurance, we'd highly recommend this. I didn't mention it at this stage as I didn't want to divert away from the original question.

To sum up without going into heaps of detail I's suggest chatting with a specialist business insurance broker.

Thanks for the advice, will keep that in mind for future posts

Vicky