In recent years a new liability insurance product has been developed which covers the employer against any damages or injuries incurred by the employees during their job durations. Generally speaking the employee is the person who works for a business and is given salary after deducting the income tax as well as the national insurance contributions. An employee cannot get a substitute for his work if he gets sick and is controlled by the company.

Employers' liability compulsory insurance

It covers the employer for any damages or harm to the employees at work because of employer's fault. Even if the employer and his business goes into receivership or liquidation, an employee can file a lawsuit to get compensation for any damages cause due to employer's negligence.

Law

According to the current law, each employer's must have ELCI and the cover should be a minimum of $5million. The insurance companies increase the amount up to 10million.

Who needs ELCI?

The businesses that are limited and organizations that have several employees are required to have this insurance. The businesses that are not limited i.e. that is run by the owner alone or the employees are usually the family members or close relatives, don't require this liability insurance. There is a case where limited companies are also exempt of this liability insurance. In case a limited business is owned and run by a single person where the 50 percent of issued capital share in the company is owned by that person, the ELCI is not required by such business.

ELCI is different then the Public Liability Insurance

The ELCI is compulsory where as the latter is voluntary liability insurance. The public liability insurance is used to cover the lawsuits filed by members of public and not the employees of the firms. These two types of products are different and cover different liabilities of a business and should not be confused with one another.

Useful checks

The insurance policy you buy must be from an authorized insurer because if the insurance is bought from a company that is not certified by the states insurance department then it will not be considered if a lawsuit is filed and an unnecessary financial loss will have to be borne by the company. At the time of buying this insurance get the certificate of ELCI which you have to show to the employees as well as the health and safety inspectors. Many states have also prohibited adding any condition in the policy regarding communication of necessary precautions. In several countries with no requirement of employer's liability insurance, many small companies face bankruptcy due to lawsuits filed by employees in case of damages. The basic employers insurance is known as ELCI or employers liability compulsory insurance.