Igor Marfin  

Do Employers Need Liability Insurance?

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Employer’s Liability Insurance is a very popular product in the world. In some countries such as the UK, it is even compulsory for companies of particular fields since 1969.  However in Ukraine only a few companies have such insurance though some experts believe in the demand for it to grow in the nearest future, given national prospects for European integration.

Employer’s Liability Policy covers two key risks that is personal injuries or damage to personal property of the employees.  Just like any other liability insurance the indemnity is paid only if the employer is indeed liable for the damage and this fact is adequately proven. No fault – no liability – no indemnity. 

Liability insurance provides the major benefit for the employer that is cutting administrative expenses for insurance
Liability insurance provides the major benefit for the employer that is cutting administrative expenses for insurance. Very often managers view the employer’s liability policy to be the cheaper alternative for health or casualty insurance. Detailed lists of insured persons are a must when it comes to health or casualty insurance policies. This, in turn, entails constant amendments following hiring or firing of employees. That is pretty time-consuming for large companies.

At the same time switching to employer’s liability insurance has three main pitfalls.

1. Indemnity is paid only if an employer is the party at fault. Casualty insurance does not have such condition.

2. Indemnity is paid only if the employee is injured within the insured premises. Health or casualty insurance does not have such limitation.

3. In case of death or permanent disability the indemnity amount is limited by the sums stipulated by the national legislation, while for casualty insurance policies parties are free to negotiate the suitable limit sufficient to cover the needs of the family of the injured person.

Despite the abovementioned flaws employers’ liability insurance has immense social significance. Only a few companies are able to pay for the their employees’ health or casualty insurance policies while work-related injuries still happen from time to time. If a company indeed failed to provide the security of their employees it should provide for the fair compensation – either from their own pocket, or by means of insurance. 

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