Why UK employers need to have insurance in place

UK regulations require businesses to have specific insurance cover in place – and the penalties can be serious. 

Many businesses new to the UK may be unaware of their obligations to carry certain types of insurance. Failure to ensure they have the right type of cover can not only leave them exposed to unlimited claims, but may also carry a legal penalty.  

Under English law, any company employing staff is required to carry Employers’ Liability insurance with a policy that provides cover of at least £5 million, and come from an authorised insurer. It may seem like a small thing, but Employers Liability insurance will help you pay compensation if an employee is injured or becomes ill because of the work they do for you.  

The Health and Safety Executive (HSE) enforces the law on employers’ liability insurance and HSE inspectors can check that you have the right cover with an approved insurer for at least £5 million. They may ask to see your certificate of insurance and other insurance details. 

You could be fined up to £2,500 for any day which you are without suitable insurance. If you do not display the certificate of insurance or refuse to make it available to HSE inspectors when they ask, you can be fined up to £1,000. 

It is important to make sure that the policy you buy is right for your business and that it complies with UK law, something that may fall between the cracks as the noise around the current economic volatility threatens to drown everything else out. Indeed, recent research from the insurance giant Aviva UK showed that many SMEs are in the dark about how inflation, supply chain disruption, and other macroeconomic and global issues can impact their own business in the event they have to make a claim.  

In particular it highlighted the danger of ‘under-insurance’, where businesses fail to adjust their cover limits to take into account inflation and other macro-economic changes.  

According to the survey of 502 businesses this month, 32% of SMEs do not take inflation or supply chain issues into consideration when reviewing their sums insured. The high inflation rate, for instance, could mean increased replacement costs for a company’s stock or machinery. 

The study, conducted by YouGov, also found that 10% of the respondents believe they could not survive if they had to shell out up to £10,000 towards a claim that was not fully insured. Meanwhile, 31% do not have employers’ liability insurance. 

We want to highlight the risk of underinsurance that SMEs face, and encourage them to speak with their broker, who can advise on the necessary covers and levels of insurance to help protect SMEs through this period of uncertainty. But we’re not just talking about it – our underwriters are working with brokers to proactively identify which of their SME customers are at risk of underinsurance.

At Paul Beare, we work closely with Wingate Benefit Solutions to make sure our clients have the right cover in place for their business. They are able to undertake a review to look at how your current arrangements comply with current legislation, whether there are any potential gaps/liabilities in cover, how the current arrangements align themselves to your contractual commitments, what improvements can be made to any cover in place and whether you are getting value for money in terms of the premiums that you pay.