Employers Liability for volunteers, students, sub-contractors, one-man bands – When is it required?

As liability specialists we are often asked to explain when Employers Liability Cover is required under the Employers Liability (Compulsory Insurance) Act 1969 (‘the Act’). It is the nuances of the rules which clients can misunderstand. Here we provide some clarity around those grey areas to assist you in your discussions with your clients.

Employers Liability Insurance covers a company for liability for damages in respect of bodily injury, death or disease caused to employees arising out of and in the course of their employment by the insured. All Employers Liability policies are required by law to carry a minimum limit of indemnity of £5m for any one claim. It is industry standard for cover to be issued with a £10m limit – work carried out offshore &/or with asbestos is an exception to this and is normally limited to £5m. Your client is responsible for the health and safety of their employees while they are at work. The Health and Safety Executive is the enforcement authority for Employers Liability insurance compliance. Your client’s business may be fined up to £2,500 for any day they trade without suitable insurance.

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What is the definition of an employee?

Whether or not your client needs Employers Liability insurance depends on the terms of their employment contract. This can be spoken, written or implied. It is the nature of the relationship with the people who work for them and the degree of control that they have over the work that they do which defines how they should be treated for insurance purposes.

One area which is commonly misunderstood by clients is around insuring sub-contractors. Your client will employ sub-contractors on one of two bases:

Labour only Sub-Contractors (LOSC) – LOSCs work under your clients’ supervision and direction. Your client will supply materials and tools. The LOSC is paid wages by the main contractor and is classed as an employee for whom your client should buy Employers Liability insurance

Bona Fide Sub-Contractors (BFSC) – BFSC work under their own supervision and direction. They will provide their own materials and tools. They are generally employed to carry out a specialist/particular type of work within a job (i.e. scaffolding/plumbing etc). The BFSC should have their own liability insurance in place and it is important that your client always checks this for their own protection. If the BFSC’s insurance fails, your client is required to provide contingent cover. If there is an accident and a BFSC is injured and their own employers liability cover fails, your client could be responsible for a claim under their public liability section. Your client does not need to buy Employer’s Liability insurance for BFSC.

So does my client really need the cover?

Your client must have Employers Liability insurance if they have employees unless they are exempt. The following employers are exempt:

  • Most public organisations including government departments and agencies, local authorities, policy authorities and nationalised industries;
  • Health service bodies, including National Health Service trusts, health authorities, primary care trusts and Scottish health boards;
  • Some other organisations which are financed through public funds, such as passenger transport executives and magistrates’ courts committees.

Your client is obliged to insure Employers Liability where:

  • They deduct NI and income tax from the money they pay employees;
  • They have the right to control where and when their employees work and how they do it;
  • They supply their employees work materials and equipment;
  • They have a right to the profit their workers make;
  • They require that person only to deliver the service and they cannot employ a substitute if they are unable to do the work;
  • Their employees are treated in the same way as other employees, for example, they do the same work under the same conditions as someone else they employ;
  • Their employees work for them on an unpaid basis whether they are students, volunteers, interns or other helpers;
  • Their employees are students, on a work experience programme, or taking part in a training programme

Your client may not need employers’ liability insurance where:

  • Their employees do not work exclusively for them (for example, if they operate as an independent contractor);
  • Their employees supply most of the equipment and materials they need to do the job;
  • Their employees are clearly in business for their own personal benefit;
  • Their employees can employ a substitute when they are unable to do the work themselves;
  • Their employees are all close family members (this exemption only applies if the company is not incorporated as Ltd company)
  • They do not deduct income tax or national insurance. However, even if someone is self-employed for tax purposes they may be classed as an employee for other reasons and your client may still need employers’ liability insurance to cover them
  • The company employs only their owner where that employee also owns 50% or more of the issued share capital in the company

If you have any questions, please contact me on 01638 675992 or laura.high@yutree.com or speak to one of our team here at Yutree.

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Liability quotes in 24 hours with new binder for Yutree

We announced, back in August, that we had been approved as coverholders by Lloyd’s of London. Since then we have been working on a binder with insurers and we are now delighted to announce the launch of our contractors binder backed by Lloyd’s.

Coverholder at Lloyd's

What does this mean for our brokers?

We will still be writing the same business that we have been i.e.

  • General liability
  • Contractors’ liability
  • Contractors’ all risks (CAR)

As well as general liability, we are now able to underwrite contractors liability and CAR risks, up to a premium of £10,000, and issue documentation without referral to insurers. This will significantly improve our service standards to our brokers.

“We have been delighted in the ability of everyone at Yutree to provide solutions for our construction clients. They are always keen to find a way to deal with difficult cover issues and are always happy to pick up the phone and discuss the details which matter to us as a broker. If only everyone in the market could offer the same!” 

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Service  

With full binding authority from insurers on general non-contracting and contracting liabilities we are able to make the following service promise to our brokers:

  • Quotes will be responded to within 24 hours of receipt as far as is reasonably practicable
  • When cover is incepted, documents will be issued immediately with the confirmation of cover

“Every day we’re saying, ‘How can we keep the customer happy? How can we get ahead in innovation by doing this?’… because if we don’t, somebody else will.”Bill Gates

So, why use Yutree?

  • A+ rated security
  • 24 hour quote response time
  • Immediate document issue
  • Access to underwriters who can make a decision
  • No policy fees
  • Exclusive quotes
  • Flexible underwriting
  • Extensions available including financial loss, Bartoline, overseas workers, JCT 6.5.1……

And, on top of all of that we provide you and your colleagues with regular technical advice and briefings via this blog to help you to advise your clients on their liability and contractors’ cover requirements. Here are a few from the archives:

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Liability by Yutree – For BIBA members

BIBA SchemeLogo2009

Since its launch in September, Liability by Yutree has proved to be a popular addition to the existing BIBA schemes. It would appear that lots of brokers have ‘one of those’ liability enquiries on their desks.

We are looking to help you with quirky and unconventional liability risks (as well as the normal ones!) We add value on risks which don’t fit an electronic solution and need an underwriter to understand the exposures and to rate them accordingly.

Our minimum premium is £150+ipt and there is no upper limit on turnover.

The following is a list of some of the trades that we have underwritten liability cover for since we launched this product. This gives you a good idea of the breadth of appetite that we have for liability business:

  • Dance class
  • Social networking facilitator and app designer
  • Beekeepers association
  • Funeral director
  • Seller of coconut oil products
  • Health food retailer
  • Provider of Bubble Soccer facility
  • Land owner
  • Distributors of beauty and skincare products
  • Calligraphy society
  • Property owner using site for car boot sales
  • Rental of storage containers
  • Wholesaler of vacuum pumps
  • Cafe and bike hire
  • Chocolate manufacturer
  • Banner manufacturer
  • Window and door manufacture
  • Pipe lagging
  • Provision of celebrants
  • Livestock keeper

If you have a risk that you would like us to consider or if you would like to talk about trading with Yutree then please do give me a call on 01638 675992/07712427988 or e-mail me on laura.high@yutree.com.

I look forward to hearing from you

Laura High

 

Emerging technologies – driverless cars

As the world advances at a stratospheric pace, then insurance must do the same. Emerging technologies, with the potential to change the status quo, are bubbling away beneath the familiar surface of our landscape. Brokers are at the forefront of this issue and need to identify those technologies which are likely to break through and change the way that we conduct our lives and our businesses. The last few years have seen drones and UAVs emerge into our world with a wide range of applications including filming, surveillance, crop monitoring, search and rescue and carrying out military strikes. Drones have gone from a ‘pie in the sky’ theory to an everyday reality in a relatively short space of time and now brokers have clients who own and operate them and require insurance. Yutree are currently working on an exciting new insurance product for drones and UAVs. More to follow on this very soon.

Another emerging technology currently powering its way onto our roads is driverless cars. As liability specialists, Yutree are watching this space with interest. Here we bring you an overview of the potential impacts of driverless cars on liability insurance as we see them today

Cars do not tick many boxes today in terms of price, depreciation, efficiency, the environment and road deaths caused by cars. Driverless cars have the potential to address many of these failings. In the UK alone each year there are over 1,700 fatalities and 180,000 other  injuries caused by motor accidents. An estimated 90% of road traffic collisions are caused by human error and only 2% by vehicle defects. Driverless cars could remove the human error element.

Driverless car - Shutterstock

Autonomous vehicle technology has developed rapidly in the past few years with new systems being incorporated in vehicles such as:

  • Autonomous Emergency Braking (AEB) – this has already been proven to lower the rate of low speed collisions that result in injury by 20%
  • Lane departure warning systems
  • Active cruise control
  • Automated parking

Google’s redesigned Prius has driven more than 700,000 autonomous miles without an accident.

Increased profitability in the motor insurance market may be one welcome by-product of this emerging technology however, there will be new insurance considerations. As the control input transfers from human to computer it is likely that liability will follow. Liability could transfer to the manufacturer. This moves claims into the commercial arena and gives insurers a lot to consider. Accidents could now be caused by:

  • Design mistakes
  • Network outage
  • Manufacturer defects
  • Road maintenance
  • Car misuse – including the potential for terrorists to gain control of vehicles for attacks
  • Cyber attack

Our driving law will need to be, virtually, rewritten to accommodate a future including driverless cars (notwithstanding the changes required following the recent VNUK case in Europe Road Traffic Act vs Public Liability – Who is responsible?). Who will pay in the event of an accident? If the driver/owner is not controlling the car, can they be held liable? They are likely to point the finger at the manufacturer or network provider. In the event of a system failure, a manual override would need to occur. Is motor insurance still required in this instance? Who should decide the ethical programming of a driverless car? One thing is clear at this stage. Product liability insurers will be looking at this matter closely and cannot escape the fact that many of the new exposures are likely to end up at their door.

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JCT Contract Clause 6.5.1 Insurance

A consequence of the recent recession has been an increase in substantial home renovations being carried out as home owners have been less able, or willing, to move. Extensions into basements, swimming pools being added, and other remodelling work, has seen home owners spending large sums of money on their properties. With this comes a significant exposure which clients will look to their brokers to advise them on.

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The 1958 court case (Gold v Patman & Fotheringham) established the legal principle that the employer (often the home owner or developer) has a liability in tort for damage to third party property where this is not as a result of negligence by the contractor.

It is important for brokers to consider this, often overlooked, part of standard building contracts. Many contractors do not fully understand the implications of JCT clause 6.5.1 and believe that their public liability cover is sufficient. Here we help you to ensure that your clients are not in breach of their contracts and are not leaving their clients exposed.

What does JCT stand for?

The Joint Contracts Tribunal. JCT contracts facilitate the process of constructing buildings. The contracts set out the responsibilities of all parties within the construction process and their obligations.

What is JCT 6.5.1 cover?

JCT 6.5.1 cover is non-negligent damage to third party surrounding property during the undertaking of a contract as required by a standard form of building contract.

For example: Your client is a home owner and is refurbishing their home. If, as a result of the contractor working on weight bearing walls, there is damage to the structure or foundations of a neighbouring property, and the contractor is deemed not to be at fault, your client will potentially be personally liable for the cost of repairing that damage. Standard home or contractors insurance will not cover this type of cost.

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You can help your client, whether they are the home owner, developer or contractor, to cover this exposure with JCT 6.5.1 cover which is usually issued in the joint names of the contractor and the employer and arranged by the contractor.

Non-negligence cover should always be considered for your clients where piling, excavation, underpinning or basement works are being undertaken. It is usually sensible to arrange this cover with the same insurers who arrange the contractor’s public liability cover to avoid delays in settlement of a claim whilst negligence is disputed.

The risks covered are named within the JCT contract as:

  • Subsidence
  • Collapse
  • Heave
  • Vibration
  • Weakening or removal of support
  • Lowering of ground water

What is a standard form of building contract?

A standard form of building contract is a form of contract containing conditions which are applicable, or can be made applicable by the use of alternatives, to a wide range of building projects.

The construction industry and contract users benefit from the use of standard contracts through time savings, cost savings, the fair allocation of risk and the management of common pitfalls surrounding contractual relations in the building industry. These contracts also reflect the benefits that are accrued through precedent meaning that users can be confident that the contracts reflect a generally acceptable position in practice.

In summary

Assuming that non-negligent cover forms part of public liability insurance leaves your contracting clients in breach of contract. Building contracts require contractors to arrange non-negligent cover on behalf of their clients. Yutree can offer this cover and have created a Quotation Request Form for gathering the relevant information from your clients. Please get in touch if you have any questions about this or if you would like to discuss a risk.

Liability by Yutree – A new BIBA scheme

BIBA schemes are in place to provide BIBA members with a wide range of useful and good quality insurance products to help you to win, retain and service clients. Yutree Underwriting are delighted to have launched a new BIBA scheme – Liability by Yutree.

Our product provides general liability cover with a focus on simplifying quirky and unconventional liability risks. From reading groups to funeral directors to chicken brokers, healthcare providers, societies and zoos! We really can consider a diverse range of trades.

Juices - Shutterstock Livestock - Shutterstock Flowerstall - Shutterstock Acting group - Shutterstock Bees - Shutterstock Lions - Shutterstock

What are we looking for?

Stand-alone liability business including public, products and employers liability.

With a minimum premium of £150 + ipt and no upper limit on turnover we can accommodate one man bands through to multi-million pound operations.

“I have used Yutree’s scheme and the staff were extremely efficient, professional and were able to place the exact cover that my client requested at a very competitive price” – Academy Insurance Brokers Ltd

Case Study

A risk was presented to us by a broker where their client ran an association for local beekeepers. The association meet, exchange ideas, hold events and sell a small amount of their produce at local markets. The client wanted their broker to arrange cover for the liabilities of the association. They needed to consider injuries to employees/volunteers, injuries to third parties or damage to property belonging to third parties arising from their activities and the sale of their products. Some typical insurer responses to such an enquiry:

  • “We don’t understand the exposure” – no quote
  • “It is too small for us to consider” – no quote
  • “Please use our e-trade facility”  There is no option for ‘beekeepers association’ in the online/e-trade drop down menu – no quote

We quoted a minimum premium of £150 + ipt which met all of their current liability insurance requirements and placed the cover issuing documentation the same day.

Why use Liability by Yutree?

As well as having underwriters on-hand to talk to about your risks, some of the other benefits of the scheme include:

  • Fast quote turnaround
  • No proposal form required
  • Standard & Poor’s A+ rated security
  • Flexible underwriting including being able to consider:
    • Overseas workers, Bartoline extensions, multiple trades, Financial Loss extensions etc
  • Overseas exports including North America
  • £10m employers liability and up to £10m public and products liability
  • No administration or policy fees
  • Exclusive quotes
  • 16% commission across all sections

Click here for our agency application and Terms of Business Agreement
Click here for a copy of our wording

BIBA SchemeLogo2009

UK Insurance Premium Tax (IPT) rate change

In the Summer Budget the Chancellor announced that there would be a 3.5% increase in the standard rate of IPT. With effect from 1st November 2015 the standard rate of UK IPT will increase from 6% to 9.5%.

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Yutree will apply the new rate of 9.5% to all new and renewal business effective on or after 1st November 2015.

Mid-term adjustments generating a return premium will be processed using the tax rate that was applied to the transaction to which it relates.

Mid-term adjustments on policies incepted prior to 1st November 2015 and generating an additional premium may be processed at the old rate subject to it being normal practice to process that transaction as a mid-term adjustment (rather than new business) and subject to it being processed before 1st March 2016. After this date, the new tax rate of 9.5% will apply.

Our approach is to ensure that there is clarity for your customers in respect of business placed via Yutree. Please make sure that your clients are aware of these changes and that they understand the financial implications of them. You can get more information to assist you with this on the government website GOV.UK – IPT change 2015 If you have any questions, please do not hesitate to get in touch.

Laura High

Director

T: 01638 675992

E: laura.high@yutree.com