Friday, 06 August 2010 09:07

INSURANCE AUGUST 2010

That’s not covered by your Insurance

Risk_Insurance

If your risk assessments etc. aren’t up to scratch, can your insurer refuse to pay out on claims made under your Employers’ Liability policy.  If so, how can you prevent this from happening?

Can they refuse to pay out?

As having Employers’ Liability insurance is compulsory, the rules are strict. For a start, they are not set by the insurers themselves but by the provisions of the Employers’ Liability (Compulsory Insurance) Regulations 1998. This means that although some may be under the impression that the insurer can refuse a claim, in most cases this is extremely unlikely. In fact, the Regulations show specific examples of when an insurer cannot avoid handling or making any payment to the claimant employee

  • “any breach of the insurance policy by the employer following the event giving rise to a claim, e.g. failure of, or delay in, notification.
  • Any lack of reasonable care by the employer to protect employees against the risk of bodily injury or disease.
  • Any breach of any enactment by the employer concerning the protection of their employees; or
  • Failure by the employer to keep records as required by the policy or to provide information from such records for the insurer”.

 

Note. The whole idea of compulsory Employers’ Liability insurance is to ensure that, in the event of an injury or ill-health caused by work activities, employees will always be able to seek compensation.

Restrictions creeping in

Although, other than in extreme cases, claims can’t be refused, insurers try to protect themselves by inserting certain restrictions in their policies, particularly in respect of “hazardous” work. For example, the majority of insurers endorse policies to restrict the height at which employees can work, and may include a standard exclusion in respect of any works involving asbestos-containing materials. Those that want these restrictions removed usually have to pay much higher premiums.

Tip. If you don’t accept the restrictions, chances are the insurer will either refuse cover, or they’ll price it at such a level that you wouldn’t want to take it anyway. However, the good news is that just because one insurer wishes to include restrictions, doesn’t mean another will. If you don’t want to play their games, seek cover from another provider.

Don’t’ ignore them

If you ignore any restrictions in your policy, it’s highly likely that the insurer will still have to honour the claim. However, the bad news is that they may seek to recoup the cost of the claim. If you fail to adhere to the terms of the policy, the Regulations permit insurers to include a condition that makes the policyholder required to “repay to the insurer all sums paid by them that they would not have been liable to pay, but for the provision of the Regulations”.

Tip 1. Check your policy, as there may be restrictions in it that you’re not aware of. If your insurer has included some in your policy, make sure you have systems in place to ensure that they are followed. The best way of doing this is by including them in your risk assessment documents.

 

As Employers’ Liability insurance is a statutory requirement, an insurer can’t refuse a claim on the grounds that risk assessments etc. aren’t good enough. However, some are including restrictions which must be complied with – if you don’t, they could pursue you for recovery of their outlay