Being a business owner comes with the responsibility of ensuring the safety and well-being of your employees. If an employee is injured or ill at work, the employee can file a lawsuit against your company. Protecting your company from legal claims made by your employees is essential. One of the ways to protect your business from potential lawsuits and financial loss is through employers liability insurance. This insurance provides coverage for accidents and injuries that occur on the job, as well as illnesses that the work environment may cause.

Throughout this article, we will discuss what employers liability insurance is, why it’s important, and what it covers.

What Is Employers‘ Liability Insurance?

Employers Liability Insurance is a type of liability insurance that protects employers against claims made by employees for injuries or illnesses resulting from their employment. This coverage is a legal requirement for employers in most countries and is designed to help employers meet compensation costs and legal fees if an employee makes a claim against them.

The coverage provided by Employers Liability Insurance typically includes medical expenses, lost wages, and other benefits employees may be entitled to after an accident or illness. It also covers legal expenses associated with defending against a lawsuit, as well as any settlements or judgments that may result. 

This coverage is especially important for employers in high-risk industries, such as construction or manufacturing, where the risk of employee injury is greater. However, employers in all industries can benefit from this coverage, as it can help protect against the financial consequences of a workplace accident or illness.

What Does Employers Liability Insurance Cover?

Employers Liability Insurance is essential coverage for any business that employs staff. There are several types of coverage that ELI typically includes, each of which serves a specific purpose. But exactly what is covered by Employers Liability Insurance? Listed below are the specific types of claims covered by this type of insurance.

• Claims for Injury or Illness

Employers have the duty to ensure the safety of their employees while they are on the job. Whenever an employee suffers an injury or illness due to their work, the employer may be liable for the costs associated with their recovery. One of the main claims that Employers’ Liability Insurance covers are injuries or illnesses caused by an employer’s work. This includes injuries that occur on the job, such as a slip and fall, as well as illnesses caused by exposure to hazardous materials or prolonged exposure to certain conditions.

• Claims for Stress and Mental Illness

Another type of claim that Employers’ Liability Insurance covers is stress and mental illness caused by an employee’s work. This includes conditions such as anxiety and depression and more serious conditions like post-traumatic stress disorder (PTSD). Employers have a responsibility to ensure the safety and well-being of their employees. So, if an employee develops a mental health condition due to work, the employer may be liable for the costs associated with their treatment.

• Claims for Third-Party Injury or Damage

In addition to covering claims for injury or illness caused by an employee’s work, Employers’ Liability Insurance also covers claims for third-party injury or damage. This includes claims made by a member of the public who is injured or whose property is damaged due to an employee’s actions. For example, suppose an employee causes a car accident while driving on company business. In that case, the employer may be liable for the costs associated with the accident, including any injuries or damage to property. Additionally, this type of coverage may also protect employers if a third party files a lawsuit against them.

• Claims for Defamation or Libel

Lastly, Employers’ Liability Insurance also covers claims for defamation or libel. This includes any false or defamatory statements made by an employee about a third party, whether it is made in writing or verbally. Employees’ actions are the employer’s responsibility, and if an employee makes a defamatory statement that harms the reputation of another person, the employer may be liable for the damages. 

By understanding these different types of coverage that liability insurance provides, businesses can ensure that they are fully protected from the financial risks associated with employee injuries or illnesses.

How much liability insurance do I need for my business?

When determining how much employer liability insurance a business needs, several key factors must be considered. These include:

• Size of Business

The size of a business will play a major role in determining how much employer liability insurance is needed. Smaller businesses with fewer employees may only need minimal coverage, while larger businesses with more employees may require more extensive coverage. The larger the business, the greater the possibility that a worker will be injured or become ill due to their work, and the greater the potential financial loss for the employer.

• Type of Business

The type of business will also have an impact on the amount of employer liability insurance needed. Businesses that are considered high-risk, such as construction companies or manufacturing companies, will typically require more coverage than low-risk businesses, such as offices or retail stores. The nature of the work being done and its potential hazards will also play a role in determining the amount of coverage needed.

• Number of Employees

The number of employees a business has will also determine how much employer liability insurance it needs. The more employees a business has, the greater the potential for injury or illness as a result of their work. Businesses with many employees will typically require more coverage than those with fewer employees.

• Potential Risks

The potential risks associated with the work being done will also play a role in determining the amount of employer liability insurance needed. Suppose a business is involved in activities that are considered high-risk, such as working with hazardous materials or operating heavy machinery. In that case, more coverage will be needed to protect against the potential costs of injuries or illnesses.

If you’re unsure which coverage is appropriate for your business, you should speak with an insurance agent.

The Bottom Line

In conclusion, employers liability insurance is an essential piece of coverage for any business owner. It provides peace of mind and financial protection in case of any accidents or injuries in the workplace. By investing in this coverage, employers can rest assured that they’re doing their due diligence to protect their employees and their business. Overall, it is a small but important step in ensuring a safe and successful workplace.