Employers’ liability is a legal requirement for most UK businesses with employees. It protects both businesses and employees in the event of injuries or illnesses caused as a result of work, but what happens when it’s time to make a claim? Who is responsible, and how does claiming affect your insurance?
In this article we explore some of the commonly asked employers’ liability questions and provide guidance as to what to expect for employers and employees alike*.
Tables of Contents
- What kinds of accidents, injuries or illnesses can be claimed for?
- Are any employers’ liability claims too small?
- Who is responsible for claiming?
- What does an employers’ liability claim process look like?
- Can you choose not to claim as an employer?
- Can you choose not to claim as an employee?
- What happens once a claim is made?
- Do premiums increase after a claim?
- How much do premiums increase by after a claim?
- How can I keep my premiums as low as possible after a claim?
What kinds of accidents, injuries or illnesses can be claimed for?
Employers’ liability claims can occur any time an employee is injured or made ill by their work. This includes workplace accidents such as slips or trips, and can extend to cover illnesses that develop many years after leaving a workplace. In short, any time someone’s health is damaged as a result of the work that they do there is potential for an employers’ liability claim.
Are any employers’ liability claims too small?
Employers’ liability policies have no excesses, so theoretically even a very small claim could be covered under these policies. If you ever sustain an injury or become ill as a result of your work and you are concerned that your claim might be too small, most claims solicitors offer free consultations and advice, so contacting experts should be your first step before making a decision.
Who is responsible for claiming?
Employees will normally claim against their employers through solicitors, who will request the details of a business’ insurer and submit the claim to them. Having said this, as an employer you usually have an obligation as a policyholder to notify your insurer or broker of any incident you believe may lead to a claim.
What does an employers’ liability claim process look like?
Although every claim is unique, an average claims process can look something like this:
- An employee catches their hand in a piece of machinery and sustains an injury requiring hospitalisation for several days
- The employer records the event in the accident book
- The employer notifies their insurer of the injury which, they believe, has the potential to result in a claim (note that this is not ‘making a claim’, but it allows insurers or brokers to provide immediate advice and make preparations for a possible claim)
- The insurer/broker provides the employer with additional questions relating to the incident and may provide further assistance in the form of advice or policy information
- The employee contacts a solicitor for advice. The solicitor advises that a claim for compensation can be made and the employee instructs the solicitor to proceed on their behalf
- The solicitor contacts the employer requesting insurance details and notifying the intention to make a claim on behalf of the employee
- The employer contacts their insurer or broker to notify them and request guidance on how to proceed, usually forwarding on the solicitor’s communication.
- The insurer/broker’s claims team liaise with the employer and often take over communications with the employee’s solicitors to process the claim
In the above a claim has only been ‘officially’ made at the point where the solicitor notifies the employer of their intention to claim on behalf of the injured employee. There are a lot of steps before that point where one might consider that the claim is inevitable, including at the point of the original injury.
The employer notifying their insurer or broker and keeping them updated could also be considered ‘making a claim’ from the perspective of the employer, however this is more of a pre-claim notification for the insurer’s records. It is best practice but at the time of the notification a claim has still not technically been made.
In reality, the claims process is generally quite messy; sometimes employers are not aware an accident has occurred, or there may be several months between one step and the next in the claims process. Some involved parties may not be easily contacted, especially if some time has passed since the injury or illness, and assessors, solicitors, claim handlers, employees and employers all need to communicate and coordinate together.
Can you choose not to claim as an employer?
In short, no. Whilst the policy may be in your name, claims are typically brought against employers’ liability policies by or on behalf of employees. Even if you attempted to settle a (typically very expensive) injury claim by paying the claimant, you would still be required to notify your insurer of the event and the injury at renewal at the very latest as a condition of your policy. Employers’ liability policies are a legal requirement and interfering with their function can have severe consequences for the businesses involved.
If, after a claim is brought to your insurer or broker, you are advised to take action which mitigates or even avoids the claim, this is a different matter. Crucially, the responsibility for such advice lies with expert parties (insurers, brokers), and if their advice is wrong or causes you or your business financial loss, these companies can be held liable. When claims are concerned, especially personal injury claims, the process and administration are best left to the experts.
Can you choose not to claim as an employee?
Yes, although you should always consider claiming if an injury or illness has harmed your earnings or quality of life. Employers are prohibited by law from taking any kind of retaliatory action against claimants, and employers’ liability policies exist solely to make sure employees like you are protected.
You are typically not dealing with your employer so much as your solicitor will deal with your employers’ insurance company, so even if you are concerned about testifying against colleagues and associates you should consider claiming; the legal requirement for employers’ liability is in place to protect you, but it doesn’t work unless you make use of it.
What happens once a claim is made?
Once a claim is made events are likely to proceed as follows:
- All involved parties will be required to make statements reflecting their understanding of events
- Evidence will be requested from all involved parties such as photographs, accident books, further testimonies and expert witness statements
- Solicitors representing the claimant and the insurance company will negotiate and determine if out-of-court settlement is an option. The methods and timeframes for personal injury claims are set in clear procedural steps which either party must take within set timeframes and in standard methods, and can be read through in detail for a range of claim types including personal injury claims here.
- If a mutually agreeable settlement can’t be reached out of court, the claim will proceed through the full legal process with both parties making a case and judgment being issued in court. Whatever compensation is ordered (if any) should then be paid by the insurer to the employee.
Do premiums increase after a claim?
Typically, yes, premiums will increase after a claim. Unfortunately, this is a reality of the insurance industry; you pay a premium in line with the risk you bring to the insurer. Once you have had one claim made against you, you belong to a sub-group of policyholders who are at risk of even more claims being made against them, so your premiums will go up.
If your insurer has incurred significant costs defending you, even if no compensation is ultimately paid to a claimant, your premiums will also likely increase to allow your insurer to recover their costs from you over the following years.
How much do premiums increase by after a claim?
Premiums can increase by varying levels after a claim, usually in proportion to the size of the claim which was made. Other factors impacting the amount by which your premiums can increase will include:
- The nature of the injury or illness
- Whether you showed your record-keeping to be in good order or poor
- How the details of the claim differed from the basis of your insurance (i.e. business description, business activities, insurance cover)
Claims often reveal areas in which insurers weren’t provided with the full information about business activities, or where there have been failures in the implementation of health and safety policies. Any policy detail/coverage changes required are usually made following the claim, but losing the trust of your insurer can result in increases in premium due to something called ‘moral hazard’, the belief that a person or business is more reckless or less precise, and that this may result in more claims being made in future.
There is no hard and fast rule of calculating premium changes as a result of moral hazard; it’s unique to every circumstance, but if you show yourself to be a moral hazard through the claim process you may end up with a much higher insurance renewal quote, or even needing to change insurers at renewal as your original provider can refuse to offer a renewal quote.
How can I keep my premiums as low as possible after a claim?
You can keep your insurance renewal premiums low after a claim by making sure your policy is right for you to begin with, and by implementing whatever changes your insurer recommends following a claim. There is no easy way to cut premium increases after a claim, but if you are as open as possible with insurers about your activities and you make sure you have the right policy (not just the cheapest) from the beginning, you can avoid the most common pitfalls.
If your insurer advises you to make changes to your business practices (before or after a claim), it’s best to confirm that you have made those changes and stick to them. If it’s not possible to meet the requests of one insurer then it is better to pay more for another insurer’s policy than to pay lip service to policy terms you can’t adhere to.
A word of warning
The most contentious and damaging premium increases tend to follow claims where the policyholder has grossly exaggerated their activities or risks to get cheaper insurance, and these can leave you unable to obtain insurance at all if the breach is great enough. For many policies, this would be a problem, but for employers’ liability this effectively renders you unable to trade as the policy is a legal requirement for businesses with employees.
*This article is intended as information only in order to help employers and employees understand how their insurance policy works. It is not intended to advise on any specific circumstance or claim and the examples given are for illustrative purposes only. If you believe that you may need to make an employers’ liability claim please seek advice from your insurance provider or a qualified solicitor.