How to set the right level for Employers’ Liability Cover

Agriculture has been proven to be one of the most dangerous professions to work in, so having the right level of employers’ liability cover in place is vital – and the level of cover needed …

Agriculture has been proven to be one of the most dangerous professions to work in, so having the right level of employers’ liability cover in place is vital – and the level of cover needed is getting higher.

Figures from the HSE show that 41 people were killed in agriculture-related activities between April 2020 and March 2021, double the number of deaths in the previous year and five-times more than the annual rate across all industries.

Employers’ Liability is a legal requirement for any business that is using labour – and £5m of indemnity cover is the legal minimum. However, that is just a starting point.

In recent times, £10m has become the industry standard and this figure is rising fast.

Changes to the Ogden tables, which help calculate the lump sum of compensation due in personal injury and fatal accident cases, have seen the size of liability claims increase substantially.

As a result, we have recommended that our clients consider taking £15M or £20M of cover.

These increases have partly been driven by low interest rates, which has led courts to award higher lump sums in a bid to ensure claimants who have been seriously injured have sufficient funds for long-term care.

Always consider the worst-case scenario and don’t presume that the death of a worker is the limit. If you have a young workforce undertaking potentially dangerous tasks, then a serious accident in which one or more suffer life-changing injuries could lead to multiple claims to cover care for the rest of their lives.

Who should be included in your risk assessment?
It is not only full-time employees you need to consider. If anyone is working or helping out on your premises under your direction, or using tools and machinery provided by you, then in the eyes of the law they are seen as an employee.

It really doesn’t matter what their tax status is or even whether they are being paid. If they are injured whilst working on your farm, then you are likely to be liable and could face a claim.

This includes full-time employees, seasonal workers and casual labour.

Domestic employees such as cleaners and gardeners should also be included. but are often covered by a household policy. It is important to check the policy wording or speak with your broker to be certain.

You may not need to provide EL cover for workers who are contractors, agency staff or self-employed – IF they have their own insurance place. But, once again, it is your responsibility to check.

It is also important to determine whether they have the appropriate qualifications for the job they are undertaking.

What about friends and family who are just helping out?
This became a bigger issue during the pandemic when some farms had to pivot to stay in business.

Perhaps family or friends are helping with an Airbnb or a pop-up camp site or assisting with seasonal picking.

Many farmers are under the impression they do not need to include them on their EL insurance policy, but this is a mistake.

Even if they are unpaid, in the eyes of the law they are ‘working’ if they complete tasks under your guidance and using your equipment.

The same is true for occasional or ‘odd job’ workers who complete small projects on site.

How to ensure everyone is covered effectively and efficiently
Premiums are usually based on the type of jobs being carried out and the size of the wage roll, including any benefits employees receive as part of their employment. We understand that some employees fulfil multiple duties, such as office work and manual labour.  As such you should provide your broker with a breakdown of wages apportioned according to job type.

With due consideration to each element above, you will be able to insure your workforce comprehensively and competitively.

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