Businesses confused when it comes to employers' liability insurance

Almost two thirds of small businesses are unsure about their legal requirements in relation to employers' liability insurance, research has shown.

Employers' liability insurance is compulsory insurance for any UK business that has employees. It serves to cover firms against claims brought against them by employees injured or made ill while at work.

However, a recent study carried out by AXA Insurance in conjunction with the British Chambers of Commerce (BCC) has revealed that many businesses are unaware that employers' liability insurance is mandatory. It means that thousands of businesses could be operating without adequate protection.

Further to this, 51% of small businesses admitted to not reading their business insurance documents, while 36% stated they had not been given information about their employers' insurance policies.

The study also showed that the economic downturn may be impacting companies' buying decisions. 15% of respondents said that they have considered cutting back their insurance expenses, with 5% confirming that they have already reduced the level of their insurance cover.

Doug Barnett, Head of Customer Risk Management at AXA, commented:

"With the economy as precariously positioned as it is at the moment, the last thing needed is more businesses needlessly going to the wall because they are not properly insured."

Barnett added that cutting back on insurance is ‘dangerous false economy' as 48% of businesses have less than £10,000 in disposable cash and could be seriously affected should a claim arise.

05/11/09