Employer’s, management and professional risks

Apart from insuring against risks that may affect their property, equipment and materials, commercial organizations also have to insure their staff, visitors and the public from the consequences of what they do. Business owners should also consider making special provision to mitigate those risks inherent with owning a business, such as shareholder, key person and loan protection (all of which are covered in the Protecting your business section of the website).

Commercial regulation and an increasingly litigious society mean that organizations face an ever-growing exposure to claims; although some may be fully justified, others may be purely speculative. Claims can be made against the organization as an entity or its directors and officers on an individual basis, from claimantsthat includeshareholders, other directors, employees, customers, members of the public, other organisations, customers, creditors and regulatory bodies.

Taking into account the cost of mounting a legal defence, winning a claim can be an expensive process and, even if you are awarded costs, it’s rare that the sum involved will come close to the amount you’ve paid to mount your defence.

 
Employer’s liability insurance
Employer’s liability insurance covers you and your business for any compensation claims that may arise from an employee becoming ill or injured while they are working for you. Although there are some exclusions – sole traders, public organizations and companies that employ only family members – employer’s liability insurance is a legal requirement with financial penalties for failing to have it.

The minimum level of cover for most businesses is generally £10 million but our advisers will recommend a level of cover that matches your business’s profile. If you don’t have employer’s liability insurance you may be fined £2,500 for every day you are uninsured, and you may also be fined £1,000 if you don’t display your employer’s liability certificate.

 
Public liability insurance
Public liability insurance protects your business against compensation claims if you, or someone employed by you and working on behalf of your business, causes injury or death to a third party or damage to their property. It also covers you and your employees when they are on your premises and working off-site, and may cover legal costs that result from defendingclaims made against you and paying compensation if your business is found to be at fault.

Unlike employer’s liability insurance, public liability insurance is not a legal requirement, however, many business owners consider it essential. In fact, such is its importance, that some professions may make it a requirement if you want to do business with them by specifying the level of public liability insurance you should have. This is particularly so in the public sector where any type of contract work will inevitably require you to have an appropriate level ofpublic liability cover.

 
Management Liability
Being a director or senior executive in an organization can bring an unenviable level of responsibility. Every decision made can result in unintended legal and financial consequenceswhich can expose both the organization and its directors and officers to expensive claims and legal costs.

A management liability policy covers both the organization as an ‘entity’and the individuals within it.Because the effects of the decisions can be complex and the legislation around them very specific, management liability policies usually provide three levels of cover:director’s and officer’s insurance,corporate legal liability and employment practice liability.

• Director’s and officer’s insurance

This covers individual directors, business owners and senior management. Accusations of alleged wrongdoings can arise from numeroussources and it can be an individual within the organization who is held accountable. Director’s and officer’s insurance providesprotection from defence and compensation costs and any resulting fines and penalties providing the allegation doesn’t relate to intentional breaches, such as fraud.

• Corporate legal liability

This covers the organization as an entity in the event of a claim for fraud. Ifa claim is made against the organization as a result of the actions of an employee, corporate legal liability will cover the organization for any subsequent legal action. It also protects against claims made for regulatory violations such as water contamination, ‘passing off’(trademark and intellectual property violations)and trespass.

• Employment practice liability

This provides protection against claims made by an organization’s employees. Claims are becoming increasingly commonand the legislation relating to employment lawever more complex. Employment practice liability covers unfair dismissal, sexual harassment and discrimination among many other employment-related issues. With claims of unfair dismissal now commonplace, not having employment practice liability can be a false economy as it may save an organization from the effects of potentially expensive court cases.

 
Professional indemnity insurance
Professional indemnity insurance is usually associated with ‘professional negligence’, its policies covering the legal costs and expenses needed to defendclaims alleging that an organization, or an individual, has provided inadequate advice, designs or services. It also provides cover for the cost of financial compensation which may include having work redone by another organization.

However, professional indemnity insurance also covers defamation, breach of confidence, breach of copyright and loss of documents, with damages being paid to cover both financial and reputational loss.

Professional indemnity insurance is not a legal requirement, its necessity depending on the type of work the organization is engaged in and is usually limited to those providing a specific ‘professional’ servicesuch as accountants, architects, consultants, designers, financial advisers and solicitors.

How can One Financial Solutions help you? One Financial Solutions is here to help you. We’ll talk to you about what you need and then introduce you to our insurance broker who’ll arrange the best possible cover.

Whatever type of insurance you’re looking for, we’ll discuss your requirementsin total confidence to find out what you need, what you don’t need and what may be a Very Good Idea. Our insurance brokers are experts in their fields, will treat you with the same level of care and integrity that we do and will offer you an innovative solution drawn from the across the entire insurance market.

So, if you’re looking for help with any aspect of insurance, please call us on 020 3714 9565 or ask us to call you by sending an email to admin@onefinancialsolutions.co.uk.