Business owners have a legal responsibility towards your
employees, customers and the public. They are legally liable
and risk being sued if an employee or a member of the public
is injured as a result of employers negligence or breach
of duty.
Liability insurance is designed to pay any compensation
and legal costs that occur if an employer is found to be
at fault.
If you
employ anyone most probably you will need to have Employers'
liability insurance. Law requires that an employer
must be insured for at least £5 million. Most insurers
automatically provide cover of at least £10 million.
The premium is calculated using a book rating. The book
rating is worked out using a base rate, which includes the
insurer's costs and reflects their interest for your particular
type of business. The rate will be high if they do not want
your type of business.
The premium will also vary based on the amount of risk attached
to a particular business or industry area.
Factors such as your claims history, the size of the perceived
risk and your approach to risk management will play an important
role in deciding the premium.
Thus the premium will be less if your working environment
is safer and you have made fewer claims.
Premiums are also averaged by considering the records of
other similar businesses. This may affect small businesses
with a good record. Your own safety record and approach to
risk management can reduce this effect.
Employers', public and product liability
For public and product liability the exposure risk is based
on the turnover and factors such as whether one works away
from ones premises.
You do not need compulsory employers' liability insurance
if your business is not a limited company and you are the
only employee or you only employ close family members. From
early 2005, limited companies with only one employee will
be exempt from compulsory EL insurance.
The law
will be enforced by HSE on EL insurance. You may be fined
up to £2,500 for each day that you do not
have appropriate insurance.
Public liability insurance
You should think about taking out public liability insurance
if members of the public or customers come to your premises
or you go to theirs. This type of insurance covers any
damages given to a member of the public due to an injury
or damage to their property caused by you or your business.
It also covers any related legal fees, costs and expenses.
Depending on the type of business you run, your turnover
and the number of employees you have your business may vary.
Product liability
Product liability insurance covers any physical item that
is sold or given away. It must be "fit for purpose",
and under the Consumer Protection Act 1987 and you are
legally responsible for any damage or injury that a product
you supply may cause.
It covers you against any compensation awarded due damage
or injury caused by your product.
Property owners' liability insurance
Property owners' liability insurance lets you pay any costs
and damages to a member of the public if they suffer an
injury following an accident on, or from, your premises.
Household policy generally insures your contents and business,
and a landlord insures the premises. Make sure that property
owners' liability is included in at least one of these policies.
Also
see to it that property owners' liability is included in
your business insurance. Sometimes it is included with
contents insurance. Check with your broker to know more about
this.
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