Aerial view of Gran Vía, Madrid

In Spain, the safety of the employees is one of the priority issues of our government. For this reason, the government has put in place different legal mechanisms to protect them against accidents, disabilities, or death when carrying out the activities for the company they work for, within the working hours. Our Social Security scheme protects citizens from unemployment and provides universal coverage in case of illness. On another side, it also exists the Mutuas, a non-profit association of employers, which offer insurances to freelancer and at the same time cooperate with the Social Security in some cases and work accidents.Another mechanism is the insurance most companies are obliged to get for their employees, accident (disability) or life (death). This depends on which collective agreement (Convenio) the company depends on. This Convenio is based on the activity of the company and may differ from one region to the other.

Although these insurances cover damages to the employees, they do not cover the liability of the company or person who is considered responsible for the damages, i.e., the employer.In any event, there is the possibility of a demand (legal or not) from the employee(s) and their relatives/heirs, Social Security, and Convenio, regardless of whether the employer is responsible. Taking this into account, we have the possibility to include the Employer’s Liability (EL) clause, which covers claims for personal injuries and consequential damages due to Workplace Accidents, for which the Insured or his dependents are responsible, due to negligence. Criminal claims are not insured. Under this clause, depending on the wording of each and every insurer, interns, trainees, temporary employees performing activities related to the activity of the company can be considered in the same way as employees in terms of EL coverage. In some cases, contractors and/or subcontractors can be included in this clause, but it will depend on the insurer clause.

In case they are not included under the EL clause, they can be covered by the following clause:
– Subcontractors Cross Liability: This clause covers direct claims of personal injuries and damages caused to the employees of the contractors and/or subcontractors who are providing a service or doing a job in name of the employer. By having this clause in policy contractors and/or subcontractors are considered third party.
Important: Even if this clause is included in the policy and the contractor and/or subcontractor is not performing a work related to the activity, damages to them by the employees of the employer will be covered by the General Liability coverage, as they are considered third party.

In most cases, depending on the court and specific judge, the basis of the indemnity imposed on the party responsible for the damages, in this case, the employer, is calculated using Baremo for traffic accidents (Law 35/2015, of September 22. Link: Baremo uses a table where each factor considered to calculate the indemnity has a score range, with the total score the indemnity to pay is determined.

This amount serves as a base of what should be paid, but it can be higher. Considering the base of the indemnity, for the market, the good local standard limit per victim for EL is 300,000.00 € but in constant evolution. Based on our experience our recommendation is a limit per victim of not less than 450,000.00 €. In certain fields of activities (e.g. construction) we strongly recommend do contract even higher sublimits or to quit sublimit per victim.

Having said all the above, we suggest the following actions if a Liability policy is in course:

– Local Liability Policy: Include/Increase the EL per victim limit to 450,000.00 € minimum (more in high-risk activities).
– International Liability Program: Include and extend the EL clause to Spain with a limit per victim of 450,000.00 €.

In Spain, insurance companies, in most cases, require the following information to include the clause:
– Number of Employees (white collar / blue collar)
– Payroll
– Claims experience.

The premium may vary depending on the insurance company, as well as the deductible to apply.


About the Author

Oliver Passolt
Oliver PassoltDirector, IberAssekuranz, Madrid