Employer's Liability Insurance
Overview
Every workplace carries the risk that someone will be hurt doing their job: a welder inhaling fumes, a mason falling from scaffolding, a machine operator losing a finger. When that happens, who pays, and how much? Employer's liability insurance answers the first question, and Nigeria's Employees' Compensation Act answers the second. Together they decide whether an injured worker, or the family of one who dies, walks away with nothing or with a fair settlement.
In this lesson you will learn what employer's liability insurance is for and the legal duty it protects, why it is compulsory, and the two routes by which an injured Nigerian worker is compensated. You will meet the Employees' Compensation Act 2010 and the fund that runs it, work out the benefits payable when an employee is disabled or killed, and learn exactly which perils the cover responds to. These are marks WAEC awards every year.
Objectives
- Explain the purpose of employer's liability insurance and the legal duty it supports
- Describe employees compensation and state the benefits payable
- Identify the perils covered by an employer's liability policy
- Explain the statutory basis of employees compensation in Nigeria
Mind map
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Flashcards
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Lesson Note
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Lesson Evaluation
Congratulations on completing the lesson on Employer's Liability Insurance. Now that youve explored the key concepts and ideas, its time to put your knowledge to the test. This section offers a variety of practice questions designed to reinforce your understanding and help you gauge your grasp of the material.
You will encounter a mix of question types, including multiple-choice questions, short answer questions, and essay questions. Each question is thoughtfully crafted to assess different aspects of your knowledge and critical thinking skills.
Use this evaluation section as an opportunity to reinforce your understanding of the topic and to identify any areas where you may need additional study. Don't be discouraged by any challenges you encounter; instead, view them as opportunities for growth and improvement.
- The main purpose of employer's liability insurance is to cover the: A. Employer's own medical bills when the employer is injured B. Employer's legal liability to compensate an employee injured in the course of employment C. Loss of profit while an injured employee is off work D. Cost of replacing damaged machinery Answer: B
- Which law currently governs the compensation of injured workers in Nigeria? A. The Workmen's Compensation Act B. The Insurance Act 2003 C. The Employees' Compensation Act 2010 D. The Pension Reform Act 2004 Answer: C
- The fund that administers employees compensation in Nigeria is the: A. National Insurance Commission (NAICOM) B. Nigerian Social Insurance Trust Fund (NSITF) C. National Pension Commission (PenCom) D. Chartered Insurance Institute of Nigeria (CIIN) Answer: B
- Under the Employees' Compensation Act, the employer's contribution to the fund is: A. 1% of total annual payroll B. 5% of total annual payroll C. 6.5% of the employee's basic salary D. 10% of the employee's basic salary Answer: A
- A deceased worker earned ₦150,000 a month and left a spouse and three children wholly dependent on him. The monthly death benefit is 90% of remuneration. How much is payable each month? A. ₦90,000 B. ₦127,500 C. ₦135,000 D. ₦150,000 Answer: C
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Revision Questions
Wondering what past questions for this topic looks like? Here are a number of questions about Employer's Liability Insurance from previous years
Question 1 Report
(a)Define the term employer's liability in insurance.
(b)State three benefits that can be covered under employer's liability.
(c)State three causes of business interruption.
Answer Details
(a) Employer's liability insurance
Employer's liability insurance is a class of insurance that covers an employer against legal liability to pay compensation for death, bodily injury, disease or ill-health suffered by his employees in the course of and arising out of their employment. It protects the employer from claims brought by workers who are injured or fall sick because of their work.
(b) Three benefits that can be covered under employer's liability
- Compensation for death or permanent disability of an employee arising from a work accident.
- Medical, hospital and treatment expenses incurred by the injured employee.
- Loss of earnings or wages during the period the employee is unable to work, and legal costs of defending claims.
(c) Three causes of business interruption
- Fire or explosion that destroys premises, plant or stock, forcing operations to stop.
- Breakdown of essential machinery or equipment.
- Natural perils such as flood, storm or earthquake damaging the business premises.
- Loss of power supply or of key raw materials halting production.
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