Farmers urged to look into employers' liability insurance

Having the right level of employers’ liability (EL) cover in place is critical, A-Plan Rural explains
Having the right level of employers’ liability (EL) cover in place is critical, A-Plan Rural explains

Farmers need to make sure they have the correct levels of employers' liability cover, as well as knowing who does and does not need to be covered.

This is very important, according to A-Plan Rural, as agriculture has been proven to be one of the most dangerous professions.

Figures from the safety watchdog HSE show that 41 people were killed in farming-related activities between April 2020 and March 2021.

This is twice the number of deaths in the previous year and five-times more than the yearly rate across all industries.

So, having the right level of employers’ liability (EL) cover in place is critical, A-Plan Rural explains.

The firm highlights that EL is a legal requirement for any business that is using labour and £5m of indemnity cover is the legal minimum, although £10m has become the norm.

However in recent years changes in the Ogden tables, which help calculate the lump sum compensation due in personal injury and fatal accident cases, have seen the size of liability claims increase substantially.

As a result A-Plan Rural have recommended that their clients consider taking £15m or £20m of cover.

These increases have partly been driven by low interest rates, which has led courts to award higher lump sums to make sure claimants who have been seriously injured have sufficient funds for long-term care.

Laura Mitchell, associate director at A Plan Rural Insurance, urges caution amongst farmers.

She said: “Always consider the worst-case scenario and, although it sounds morbid, don’t presume that the death of a worker is the limit.

"If you have a young workforce undertaking potentially dangerous tasks, then a serious accident in which one or more suffer life-changing injuries could lead to multiple claims to cover care for the rest of their lives.”

Who needs to be covered?

It is not only full-time staff you need to consider. If anyone is working or helping out on your premises under your direction, or using tools and machinery provided by you, then legally they are seen as an employee.

It really doesn’t matter what their tax status is or even whether they are being paid. If they are injured whilst working on your farm, then you are likely to be liable and could face a claim.

This includes full-time employees, seasonal workers and casual labour.

Who does NOT need to be covered?

Domestic employees such as cleaners and gardeners should also be included but are often covered by a household policy. Check the policy wording or speak with your broker.

You may not need to provide EL cover for workers who are contractors, agency staff or self-employed if they have their own insurance place. But please remember to check first.

It is also important to make sure they have the appropriate qualifications for the job they are undertaking.

If you utilise self-employed workers or small contractors with no insurance in place, then you may still be liable.

What about friends and family who are just helping out?

This has become a bigger issue during the pandemic when some farms have had to change how they do things to stay in business.

Perhaps family or friends are helping out with a diversification such as a farm show. Many farmers are under the impression they do not need to include them on their EL insurance policy, but this is a mistake.

Laura would advise thinking about the worst case scenario: “Even if they are unpaid, in the eyes of the law they are ‘working’ if they complete tasks under your guidance and using your equipment.

The same is true for occasional or ‘odd job’ workers who complete small projects on site.”

How to ensure everyone is covered effectively and efficiently

Premiums are usually based on the type of jobs being carried out and the size of the wage roll, including any benefits employees receive as part of their employment.

It’s expected that some employees fulfil multiple duties, such as office work and manual labour. As such you should provide your broker or insurer with a breakdown of wages apportioned according to job type.

With due consideration to each of these elements, you will be able to insure your workforce comprehensively and competitively.