Having employees in a company is a major expense. Ignoring the wage side of things, the most expensive cost is normally the insurance for the employees, or that’s at least what most people think.
Well you’re right and you’re wrong. If you phone up your liability insurer and tell them you want to add an employee to your policy you will probably be told that it is more than what you paid to insure yourself. This is where most confusion occurs.
First and foremost, if you are the proprietor of the business, you are only insuring yourself for public liability. When you add an employee, you first have to cover them for public liability the same as you and on top of that you will also need employers liability insurance. When you think of it this way, the price makes more sense.
For example, you might be paying £50 for public liability insurance for yourself only and when you add an employee you are charged an additional £80. Knowing that £50 of that is for the same cover as you, we realise that the employers liability insurance is only £30.
Obviously these prices are theoretical, and quotation calculations are more complex than this but it gives you an idea of what you are being charged for. It also confirms that employers liability insurance is cheaper than you think!