Personal accident and employers' liability insurance policies are similar as they both insure against injury and/or death; however they are not the same. In this guide we explore the differences and similarities between both types of insurance policy, including examples so you can see how each one works and decide which is best for you.
Quick Overview of Cover
|Personal Accident (PA)||Employers’ Liability (EL)|
|Injury to your employees||Yes||Yes|
|Injury outside of working hours||Common||No|
|Illness contracted by your employees||No||Yes|
|Required by law||No||Yes|
|Certificate must be displayed||No||Yes|
Tables of Contents
- What is personal accident insurance?
- Who is personal accident insurance for?
- What is employers' liability insurance?
- Who is employers' liability insurance for?
- What is the difference between Employers liability and personal accident insurance?
- Can I claim on both policies at the same time?
- Do I need personal accident, employers' liability, or both?
- Can I get personal accident and employers' liability cover from the same insurer?
What is personal accident insurance?
Personal accident insurance provides a financial benefit to an insured person who is injured or killed. In addition to a lump sum for serious injuries, they often include cover for costs incurred and lost wages as a result of the injury.
Sometimes these benefits can be paid even if the accident which caused the injury occurred outside of working hours, although ‘working hours only’ policies also exist. Some exclude certain sporting injuries (skiing being a common exclusion), but others will cover a range of sporting injuries such as from football, tennis, running or cycling.
- Cara’s finger is severed during her apprenticeship at a woodworking business. She receives a lump sum benefit from her employee personal accident policy, and a weekly benefit whilst recovering.
- Dave is involved in a car accident when driving home from work and suffers a back injury. He is hospitalised for several weeks, but during this time his personal accident policy pays him a weekly benefit. His personal accident policy also pays for physiotherapy and other rehabilitation treatments.
- Hayley loses hearing in one ear after a high diving accident. Her personal accident policy pays her a monthly benefit during her recovery in addition to a lump sum for her disabling injury.
Who is personal accident insurance for?
Personal accident insurance can be purchased by individuals on a private basis, but it is often available for businesses to purchase for their employees. Both policies are ultimately for individuals whether they are employees or not, but business personal accident policies may include extra features such as rehiring and retraining costs.
If you are looking for personal accident cover for yourself or your employees, be sure to ask for specific examples and details as to what is covered – there can be a lot of variation in terms of cover levels and terms and conditions. It‘s OK to ask an insurer to compare their policy to a competitor’s.
What is employers' liability insurance?
Employers’ liability insurance covers claims from business employees for injury or illness caused as a result of their work. Policies are bought by businesses to cover all employees working for them and are required by UK law in all but a few special cases.
- A shelving unit collapses in a warehouse, injuring three employees. Each employee makes a claim for compensation against the employer through independent solicitors. The business which owns the warehouse has an employers’ liability policy, and their insurer handles the legal defence and claims payments for the incident.
- Several years after leaving his job in a chemical plant, John is diagnosed with a respiratory disease which he believes is due to his work at the plant. He hires a solicitor and they successfully sue John’s old employer for compensation. The chemical plant’s employers’ liability policy pays this compensation.
Who is employers’ liability insurance for?
Employers’ liability policies are purchased by businesses, but as a legal requirement in the UK they are intended to protect employees from injuries or illnesses sustained as part of their work.
The minimum allowed cover level for employers’ liability policies is £5 million, although many insurers offer (and recommend) levels of £10 million. In higher risk sectors such as construction it is not unusual to see contractual requirements for even higher limits.
What is the difference between Employers liability and personal accident insurance?
The difference between employers’ liability and personal accident insurance is in who it protects and who is covered by it; employers’ liability protects employers, personal accident protects individuals.
Even if an employee is injured, there is no guarantee that they will then claim against their employer, and they won’t necessarily win any compensation if they do. For an employers’ liability claim to be paid the following must happen, and proceedings can sometimes take years to conclude:
- Employee is injured or made ill as a result of their work
- Employee decides to claim against employer
- Employee’s solicitor believes there is a reasonable chance of claim succeeding
- Legal proceedings find that employer owes compensation
- Employer’s insurance policy pays the employee
Personal accident policies are bought by employers or members of the public, and pay out immediately for injuries that qualify under their wordings. If your injury is not excluded from their terms and conditions you will qualify for payment without having to hire a solicitor or claim against your employer. For a personal accident claim to be paid the following must happen, and typically takes no more than a few weeks:
- An insured person is injured
- They obtain a doctor’s note and provide it to their insurer (sometimes this is unnecessary)
- Insurers pay compensation
Can I claim on both policies at the same time?
If an injury is covered by both policies you certainly could start the claims process on each policy at the same time, but settlement payment times are likely to vary between each policy. Personal accident policies pay out relatively quickly and employers’ liability policies require much longer legal processing before payments are made.
Do I need personal accident, employers' liability, or both?
If you are an employee of a business your employer is required by law to hold employers’ liability and to display their certificate of cover in their office. You can request to see it at any time and they can be held liable for fines of £2,500 for every day they do not hold a policy.
You could buy a personal accident policy as a sole trader or even as an unemployed person depending on the terms of the policy, but there is no legal requirement for you to hold cover, nor is there a legal requirement for employers to buy a policy for their employees. Sometimes personal accident policies are included as a ‘perk’ of employment, or included with car or home insurance as an ‘add-on’.
Can I get personal accident and employers' liability cover from the same insurer?
Yes, business insurers and brokers typically offer both policies to businesses, often as packages alongside other common business insurances. If you are buying a policy as a private individual (such as car insurance or home insurance), it is worth asking if personal accident is also included or provided by your insurer. Just be sure to confirm that if the policy is an add-on to a car insurance or home insurance policy that is covers injuries away from the car or away from the home.
If an add-on is limited to injuries related to the main policy cover it may be more cost effective to source a standalone, general personal accident policy, which usually covers the same injuries your car or home insurance add-on does with the added benefit of not being tied to specific circumstances.