“Crap insurance” is a popular term for liability insurance that we can take out for bodily injury, property damage or financial loss caused to someone else. Such employer liability insurance is offered by banks and insurance companies for various situations. It is a practical form of protection, especially if the employer claims the amount of compensation for damages caused by the employee.
You may think you don’t need anything like this. You don’t come into contact with money and you don’t drive a car, so what damage can you cause? Don’t be fooled, it’s quite easy. Damage can be caused, for example, by a wrong instruction to a subordinate, spilling coffee on your computer or losing your mobile phone. You can also cause damage by mixing up units or adding a zero to an order.
Any profession can be insured, whether you are required by law to do so or are just prudent and prudent. In general, insurance can always be recommended to those whose profession involves signing a material liability agreement, you are entrusted with expensive equipment or gadgets, or you can directly affect the health and lives of people or animals.
Tip: If your employer asks you to sign a material liability agreement, read what it says and what the consequences of signing it could be for you.
The insurance benefit is then usually paid directly by the insurance company to the employer. If you have already paid the claim yourself, the amount can also be transferred to your account. Of course, the insurance cover only applies to the damages that your employer actually wants you to pay for.
If the insurance company refuses to pay, appeal. Sometimes insurance companies just try to see what the client can bear. And if even your appeal doesn’t help, don’t be afraid to get legal help.
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Of course, it’s not necessary to run to the insurance company and think about insurance for every potential claim. It’s worth taking stock of what work equipment you come into contact with, what you’re realistically making decisions about and what you’re responsible for. But this will then also affect the amount of the insurance policy. When arranging insurance, you will usually complete a detailed questionnaire to tell us what your job involves and what you use for work.
For example, people who use a company car at work will pay more for insurance. However, its insurance is not usually included in the basic offer, so you will have to choose a more expensive type of policy.
Tip: Do you have a company car and wonder what happens if you damage it? Take a quick test to get an idea of whether you are liable for damage to your company car in an accident at all and under what conditions.
According to the Civil Code, an employer who is liable for damage caused by its employee to a third party may subsequently recover such damage from the employee. In this case, the employer claims against the employee. If you have taken out employer’s liability insurance, this policy will also cover situations where the damage is caused by negligence. However, it is important to pay attention to the exclusions in the policy.
It is good to remember that you are not liable to your employer for any damage, but certain conditions must be met. These are:
If any of the prerequisites are missing, you are not liable for damages.
Employees are protected under the Labour Code by paying a maximum of 4.5 times their average gross monthly earnings before the damage. In practice, this means that, for example, with a monthly wage of CZK 36,000, you may be required to pay up to CZK 156,000 in damages. As we have already stated above, the condition for the application of the statutory limit is that the damage is caused by negligence, i.e. by omission of work duties. This may occur, for example, if you do not park your company car overnight in the company garage as you are instructed to do, but leave it parked outside.
Of course, the situation is completely different if the employee’s intent is intentional. In such a case, he or she is liable to pay the employer for actual damages, in the amount actually incurred by the employer. The same consequence arises if the damage was caused while drunk or under the influence of addictive substances.
However, only the first case, i.e. damage caused negligently, can be insured. Of course, no insurance company will insure you for intentional acts.
If your employer has a claim for compensation against you, it may only set it off against the employee’s claim for wages, salary, remuneration under the agreement and compensation for wages or salary, and only make deductions from wages on the basis of the agreement on deductions from wages.
Tip: Is your employer asking you for compensation even though it has no right to do so? Want to sue and not sure if you will win? We will assess your chances of success in court and suggest a solution that will lead to the desired outcome.
Of course, we don’t just have to cause damage to our employer or a third party. What if we use our own computer or other personal equipment at work and destroy it by careless handling?
A normal liability policy won’t cover you for that either. Rather, you should try to prevent such situations and not use your own tools and equipment at work. If your employer forces you to do so, you can point out exactly such situations.
If you are an entrepreneur, or self-employed, then you should strongly consider taking out an insurance policy. With almost any trade, you can imagine damage being caused – a hairdresser can have her hair dye spatter on a customer’s designer suit or handbag, a plumber can drop his sikes in the middle of a new bath. You don’t even have to consider your gainful activity explicitly as a business. If you walk dogs for a living in your spare time, you’ll appreciate an insurance policy in case an expensive breed of dog, such as a Tibetan Mastiff, irretrievably escapes.
So, if you cause damage to a customer’s property in any way, business liability insurance covers you against financial damages. The cost of insurance is very individual, there are insurance companies that will insure almost any business and the cost of the policy is based on the limit of the potential damage. But elsewhere, they look very closely at what you do and how you do it.
If you employ at least one employee as a business, it is compulsory for you to have legal liability insurance. This then covers the costs incurred by the employee due to an occupational accident or illness.
Tip: Are you planning to start a business and want to set up an LLC? Setting up an LLC is a complicated and time-consuming procedure due to legislation and official processes. If you need to start your business as soon as possible, we will set up a customized limited liability company (Ltd.) for you.
In some professions, it is a legal requirement to take out employers’ liability insurance, for example in professions with a high level of risk or responsibility for other people’s property or health. However, regardless of the legal obligations, any employer may have a claim against you for workers’ compensation, which they can claim, particularly if your policy fails to cover the loss. Choosing the right insurance is therefore key to covering the amount of compensation for damages caused by the employee.
This includes:
However, it always depends on whether you work as an employee, in which case your employer should be legally insured, or whether you are self-employed and the obligation applies directly to you.
Be careful when signing an insurance contract and read everything properly. Especially what is written in smaller print at the end. You may find exclusions that make the policy not apply in full. Exclusions typically relate to intentional acts that caused the damage or drunkenness. However, you may also be unpleasantly surprised by exclusions related to misdirection during installation, repair, alteration and construction work, or related to the provision of bulk data processing and internet services.
Despite some partial disadvantages, professional indemnity insurance is a very useful product that can save you not only valuable money, but also the nerves, stress and time associated with dealing with compensation.
Known as a “bullshit policy”, professional indemnity insurance covers damages caused by an employee while on the job, up to a statutory limit of liability of 4.5 times their gross wages. It most often covers damages caused by negligence, such as the loss of work equipment or an accident involving a company vehicle. However, it does not cover damage caused by intent, intoxication or gross misconduct. Insurance is useful for any employee who wants to avoid unexpected financial problems caused by damage to their employer’s property.
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Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 10 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.
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