Terms and conditions of employer's liability insurance

Valid as of 01.02.2023

The terms and conditions of the LHV employer’s liability insurance describe the scope of insurance cover, what to do in the event of loss event, and the principles of compensation.

The aim of the employer’s liability insurance is to provide the employer with insurance cover in the event of an accident at work or an occupational disease, and the employer’s obligation to compensate for the damage incurred, as well as in the event of a claim for damages arising from an accident at work or an occupational disease and the employer needs legal assistance to defend against the claim.
Under these terms and conditions, the insurer will reimburse the employer for claims arising from accidents at work and for legal assistance costs incurred in defending against unfounded claims. If, in addition, insurance cover for health damage arising from occupational disease has been selected, the insurer will reimburse claims made to the employer based on the employee’s diagnosed occupational disease.
Employer’s liability insurance is necessary for all employers, as it is the employer’s responsibility to provide a safe working environment and to train employees. The damage suffered by an employee or their dependant(s) as a result of an accident at work or an occupational disease can be considerable and thus have a significant impact on the economic stability of the company.
The insurance contract is made up of an insurance policy (hereinafter the ‘policy’) and these terms and conditions of employer’s liability insurance (hereinafter the ‘terms and conditions’). The policy states the sum insured (the upper limit of compensation) and the amount of the insurance deductible (the amount the policyholder will have to pay in the event of an insured event). Before concluding an insurance contract, the policyholder must check the accuracy of the information and the suitability of the scope of the insurance cover and read the terms and conditions. In matters not covered by the insurance contract and the Terms and Conditions, the parties to the insurance contract are governed by the law of obligations and other legislation.
Insurer is AS LHV Kindlustus (hereinafter ‘LHV’).
Policyholder is the person provided in the policy who concludes an insurance contract with LHV.
Insured person is the employer, i.e. the person whose liability is insured. Insured person is the policyholder and/or the person provided in the policy.

Contact details for the insurer

Customer support
Mon–Fri 9 am–5 pm
699 9111
kindlustus@lhv.ee
lhv.ee

Claims adjustment
Mon–Fri 9 am–5 pm
6801122
kahjud@lhv.ee
lhv.ee

Definitions

A loss event is an unexpected event that results in property damage. The loss event may or may not be an insured event.
Insured person is an employee who has had an accident at work or who has been diagnosed with an occupational disease and the insured person is liable for the injury caused to the employee. In the event of the employee's death, the employee's dependents and the person who has borne the funeral expenses are also considered injured parties.
Insured object involves the proprietary obligations arising from the insured person’s civil liability under the law (hereinafter the ‘insured person’s liability’). Civil liability arising from an occupational disease (unless otherwise stated on the policy) or a work-related illness is not an insured object.
Insured event is an event established in the terms and conditions in case of which LHV must fulfil their obligations under the contract. Losses caused by the same sudden and unforeseeable event are considered as a single insured event.
Insurance cover is the insurer’s obligation, limited by the terms and conditions of the insurance contract, to pay compensation or otherwise perform the insurance contract in the event of insured events specified in the policy.
Insurance period is the period of time indicated in the policy during which the loss or damage resulting from an insured event will be compensated.
Insurance territory is the area where the insurance contract is valid.
Occupational disease an illness caused by a risk factor in the working environment or the nature of the work mentioned in the list of occupational diseases. The definition of an occupational disease stems from the Occupational Health and Safety Act. An occupational disease is a long-term health disorder, the main cause of which is a work-related physical, physiological, chemical or biological risk factor.
Employee a natural person in an employment or service relationship with the insured person; also includes member of the management board, procurator, trainee and temporary employee. Also includes persons who work for an insured person on the basis of a contract under the law of obligations (for example, an employment contract, authorization contract, agent's contract), provided that the insured person pays social tax on the basis of this contract.
Accident at work is physical harm sustained by or death of an employee which occurred while the employee was performing a job assigned by the employer or engaged in other work performed with their consent, during a break included within working hours or during other activities pursued in the interests of the employer. Physical harm or death that occurred in the cases listed but which is not causally connected to the employee's work or work environment shall not be considered an accident at work. The definition of an accident at work stems from the Occupational Health and Safety Act

1. Policyholder and insured person

   1. Policyholder is the person named in the policy who has concluded an insurance contract with LHV and who is obliged to pay the insurance premiums.
   2. Insured person is the employer, i.e. the person whose liability is insured. Insured person is the policyholder and/or the person provided in the policy. Policyholder is responsible for explaining the terms and conditions of the insurance contract to the insured person and for complying with them.

2. Insurance coverage

   1. Insured event is an accident at work (under the Occupational Health and Safety Act) that occurs to an employee during the insurance period and as a result of which the insured person has a legal obligation as an employer to pay compensation.
      Insured event can also be the diagnosis of an occupational disease in the employee (and/or former employee) during the period of insurance if occupational disease insurance cover is included in the policy.
   2. Insured event is not covered by the exclusions set out in clause 4 of the terms and conditions.
   3. Obligations to compensate for damage caused by one and the same circumstances or event will be considered a single insured event, subject to the sum insured or the agreed indemnity limit stated in the policy and one insurance deductible. Insured event is deemed to have occurred at the time of the occurrence of the first loss or injury (giving rise to an obligation to pay compensation) which gave rise to the insured person’s obligation to pay compensation.

3. Insurance coverage physical harm resulting from occupational disease
   In addition to the coverage for losses caused by accidents at work, the policyholder can also choose insurance coverage for losses resulting from occupational diseases.

   1. If insurance coverage for a loss resulting from an occupational disease is specified in the policy, the insurance contract shall apply to claims for compensation for physical harm resulting from an occupational disease.
   2. Insurance coverage for physical harm resulting from occupational disease is valid under the following conditions:
      • the person who files the claim for compensation for damages resulting from an occupational disease is an employee or former employee of the policyholder. For the purposes of these terms and conditions, a former employee is a person whose employment relationship with the policyholder had ended as of the time of signing the insurance contract, but not more than three years ago;
      • the occupational disease has been diagnosed by a qualified occupational health doctor;
      • the occupational disease was diagnosed during the valid insurance period;
      • the policyholder and/or the insured person was not aware of the possible diagnosis of an occupational disease of his or her employee or former employee or that his or her employee or former employee has been sent for occupational disease detection studies and expertise when concluding the insurance contract.
   3. LHV shall indemnify damage for which the insured person is liable according to the proportion of the time the employee or former employee worked for the insured person out of the total period of time during which the occupational disease developed.
      Example: The employee is diagnosed with an occupational disease that, according to the occupational health notice, developed between 1992 and 2022, i.e., for 30 years. In the years 2017-2022, he worked for the insured person, and this accounts for 20% of the period that was injurious to his health. The insured person's share in compensating the damage is therefore 20%.
   4. Insurance coverage for health damage resulting from an occupational disease applies to the extent of the limit of indemnity specified in the policy for the insurance period, but not in an amount greater than 100,000 euros.

4. Exclusions

   LHV does not indemnify claims for losses related to the following circumstances.

   1. Occupational disease
      Damage resulting from an occupational disease diagnosed in the employee, unless the policy provides insurance cover as described in clause 3 of the terms and conditions.
   2. Work-related illness
      Damage arising from a work-related illness diagnosed in the employee.
   3. Non-material damage and loss of income
      Damage based on non-material damage, i.e. moral damage, and loss of income other than loss of income related to the impairment of a person’s health (the loss of income will be calculated on the basis of the average of the last 12 months’ social taxable income of the person affected within the meaning of the terms and conditions), and any other loss other than proprietary damage as described in clause 8.3 of the terms and conditions.
   4. Compulsory insurance
      Damage that is compensable under compulsory insurance (including motor third party liability insurance) or mandatory insurance (including where the employee did not have health insurance because the employer did not fulfil their legal obligations).
   5. Claims between insured persons and claims of persons connected with the insured person
      LHV does not indemnify claims between insured persons or between the policyholder and the insured person.
   6. Crime
      A loss caused by a crime, unless the crime was committed through negligence or gross negligence.
   7. Wilful act
      Damage caused intentionally by the policyholder and/or the insured person and/or the injured party.
   8. Fines, interest on arrears, interest
      Public sanctions (e.g. monetary penalty, fine, penalty payment, imprisonment) and private sanctions (e.g. earnest money, late payment, liquidated damages, guarantee, interest)..
   9. Previously known circumstances
      The loss arises from a circumstance or event of which the policyholder and/or the insured person was aware or should have been aware before concluding the insurance contract.
   10. Increased liability arising from a contract
       Claims based on the violation of contractual obligations (including collective agreement) if they expand the insured person's liability, restrict the insured person's rights or otherwise differ from the terms and conditions for compensation provided by law. Among other things, additional compensation agreed in the collective agreement is not indemnified unless separately agreed in the policy.
   11. State of intoxication
       A loss if its occurrence is causally connected to the employee being under the influence of alcohol, drugs, toxic or other intoxication.
   12. Unprofessional or illegal activities
       A loss caused by the activity for which the insured person or its employee lacked the necessary permit, qualification or licence.
   13. Force majeure and other events beyond the control of employer
       Force majeure is a circumstance beyond the control of the insured person. Among other things, the insurance contract does not apply to, e.g., losses caused by a natural disaster (a natural phenomenon of an extraordinary nature), war or war-like activity, coup d'état, uprising, terrorism, revolution, state of emergency, civil unrest, act of a foreign enemy, strike, crime (including computer crimes and cybercrime), expropriation, confiscation of assets , nationalization and any other similar event.
   14. Explosives and handling of weapons
       Damage caused by any explosive (including blasting), explosive product, pyrotechnic product or weapons (including firearms, chemical and biological weapons and electromagnetic weapons).
   15. Other environmental and health hazards
       Damage caused by asbestos, tobacco or tobacco products, toxic mould, drugs, any infections and communicable diseases (including AIDS, HIV and hepatitis), dioxin, genetically modified substance or organism, animal disease agents, pesticides, radioactive radiation, nuclear energy, magnetic, electric or electromagnetic field.

5. Validity of insurance contract

   1. The insurance contract is valid for the terms and conditions of insurance, the period, and the territory agreed in it. Unless a more specific insurance territory is indicated on the policy, the insurance contract applies to insured events that have occurred in the Republic of Estonia.
   2. The insurance contract is valid for claims made against the insured person within three years after the end of the insurance period, but the underlying event should have occurred during the insurance period. The insured person is obligated to inform LHV of the claims made against them as soon as possible.

6. Sum insured, limit of indemnity and deductible

   1. The sum insured is the amount specified in the policy, which is the maximum disbursement amount for all insurance indemnities (including legal assistance fees) payable during the insurance period.
   2. The limit of indemnity is the maximum amount of insurance indemnity, specified in the policy, to be paid out for the insurance period, insured event, legal expenses, type of damage or insurance risk. The limit of indemnity is not additional to the sum insured, but is contained within in it.
   3. Deductible is the amount, specified on the policy, that is to be borne by the policyholder in case of an insured event. In relation to claims arising from the same insured event, the deductible is taken into account only in the case of the first disbursed insurance indemnity.

7. Legal expenses

   1. For the purpose of the terms and conditions, legal costs are out-of-court legal aid, court and expert analysis costs that accompany related to the defence against and processing of claims against the insured person.
   2. Legal expenses are indemnified by LHV if they are necessary to defend against and process claims. LHV shall indemnify legal assistance expenses even if the claim against the insured person later turns out to be baseless
   3. Only legal expenses agreed in advance with LHV will be indemnified.
   4. LHV will not indemnify legal expenses if indemnification of damages is excluded by the terms and conditions.
   5. A deductible is not charged in respect to legal expenses.
   6. LHV shall be released from further obligation to indemnify legal expense if, it turns out during the loss process that cause of the loss was an exclusion specified in the terms and conditions. LHV shall be released from its performance obligation at the moment it became aware of the exclusion applicable to the loss event.

8. Insurance indemnity and indemnifiable loss

   1. The indemnity is a sum of money that is paid out to the policyholder to compensate it for material damage and the necessary legal expenses incurred as a result of an insured event.
   2. LHV indemnifies material damage caused to the employee due to an accident at work or occupational disease, and legal expenses incurred by the insured person in order to contest claims against the insured person.
   3. LHV indemnifies the following material damage:
      • property damage, i.e., the cost incurred as a result of damage or destruction of an item belonging to the injured person on repairing or replacing the item with an equivalent one. If it is not possible to repair the item or purchase a new equivalent item, LHV shall compensate the value of the irreparable/unavailable item;
      • personal injury, i.e., expenses incurred by the injured person as a result of physical harm, bodily injury or death;
      • material damage, which is not property damage or personal injury, but a direct consequence of said damage. LHV indemnifies up to 20% of the personal injury and/or property damage to the injured party for other material damage (for example, expenses for filing claims related to damage compensation) that is directly related to the property damage and/or personal injury.
   4. LHV does not indemnify:
      • non-material or moral damage, which primarily includes the physical and mental pain and suffering of the injured person;
      • loss of income, with the exception of a decrease or loss of earnings related to physical harm sustained by a person.

9. LHV´s right of recourse

   1. The right of recourse of the insured person against the person liable for the loss or damage will be transferred to LHV to the extent of the amount indemnified upon payment of the insurance indemnity.
   2. If the insured person waives their claim against the person liable for the loss, LHV is released from its enforcement obligation to the same extent that LHV could have claimed compensation from the person liable for the loss.

10. Safety requirements

    1. For the purposes of compliance with the safety requirements, the insured persons are considered to be assimilated to the policyholder.
    2. The policyholder and persons treated as their equals are obliged to comply with the safety requirements arising from legislation and relevant instructions.
    3. The policyholder and persons treated as their equals have a duty to exercise reasonable care and to act with due diligence in order to avoid an adverse outcome.
    4. The policyholder and persons treated as their equals are obligated to take measures to prevent repetitive damage.

11. General principles for indemnification

    1. LHV will make a decision on indemnification within ten working days of having received all the necessary information about the loss event. LHV will pay the policyholder the insurance indemnity within at least two weeks after the claim against the insured person has been deemed proven and justified and the decision on indemnification has been made and/or after a court judgment has entered into force. If part of the claim is not proven, LHV will only reimburse the proven part of the claim. LHV may, for good cause, extend the time limit for a decision on indemnification. LHV has the right to postpone the time limit for making a decision on indemnification if civil, criminal or misdemeanour proceedings have been initiated in connection with the loss event and the circumstances established in the course of the proceedings are relevant to the determination of LHV’s obligation to pay compensation.
    2. If more than one person makes a claim against the insured person in respect of the same insured event and the total amount of the claims exceeds the sum insured stated in the policy, LHV will indemnify the claims on a pro rata basis, based on the amount of the claims up to the sum insured stated in the policy (provided that the claims are made in time and LHV has not already indemnified other claims).
    3. When compensating for loss or damage, LHV is guided by the legislation in force at the time of the insured event, the terms and conditions of the insurance contract, the sum insured stated in the policy, the indemnity limit, and the insurance deductible.
    4. The sum insured and the limits of indemnity for the period of insurance will be reduced in proportion to the insurance indemnity and legal costs paid out under the insurance contract. A supplementary contract can be concluded to restore the sum insured and the indemnity limit.

12. Action to be taken in case of loss event

    In case of a loss event, the policyholder and/or the insured persons have to:

    1. take measures to prevent or reduce further damage;
    2. report the incident immediately to:
       • the police, if it is an offence;
       • emergency services, in case of fire or explosion;
       • the occupational health board of the occurrence of the accident at work and the diagnosis of the occupational disease;
    3. investigate, in accordance with the procedures established by law, the causes and circumstances of an accident at work or occupational disease;
    4. notify LHV of the loss event or damage within five days of its occurrence or becoming aware of it;
    5. submit to LHV, without undue delay, any claim for loss event submitted to them and inform LHV of any circumstance that may have resulted in the occurrence of an insured event, but no later than five days of the time the insured person became aware of the circumstance or the submission of the claim. The insured person may not give any consents or promises related to compensation for damage before having agreed them with LHV;
    6. follow the code of conduct provided by LHV;
    7. provide LHV with explanations and evidence to establish the circumstances of the loss event, the extent of the loss event, and the basis on which the liability of the insured person has arisen;
    8. inform LHV at the earliest opportunity if the damage is compensated by a third party, or if the third party waives the claim for damages.

13. Obligations of the policyholder

    The policyholder is obligated to:

    1. pay insurance premiums in the agreed amount and manner;
    2. explain the rights and obligations arising from the insurance contract to all insured persons. If these persons violate the safety requirements, this means that the policyholder has defaulted on the contract;
    3. provide LHV with complete and correct information for the purpose of assessing the insurance risk and to inform LHV, when concluding the insurance contract, of all material circumstances of which it is aware that affect or may affect the decision to conclude the insurance contract on the agreed terms and conditions;
    4. allow LHV to consult the documents necessary for the conclusion of the insurance contract and assess the insurance risk;
    5. notify LHV of the occurrence of multiple insurance;
    6. inform LHV at the earliest opportunity that the information provided to LHV has proved to be incorrect or incomplete;
    7. notify LHV immediately of any increase in the insurance risk, for example, if there are changes compared to what is stated in the insurance contract. An increase in the insurance risk is considered to be a situation in which the circumstances affecting the insurance risk, about which LHV has requested information when concluding the insurance contract, have changed and as a result the probability of an insured event occurring has increased;
    8. make every effort to prevent an insured event from occurring and to minimise any possible loss, to avoid any possible increase in the insurance risk, and not to allow the insurance risk to increase;
    9. return the insurance indemnity paid to LHV in the event that, after LHV has compensated the loss, circumstances precluding compensation arise or the loss is compensated by a third party.

14. Obligations of LHV

    LHV is obligated to:

    1. familiarise the policyholder with the documents related to the insurance contract prior to the conclusion of the insurance contract and to keep confidential the information disclosed to LHV in connection with the insurance contract;
    2. issue to the policyholder a replacement policy, as well as copies of the policyholder’s declarations of intent made in a format that can be reproduced in writing, and information and copies of documents affecting the policyholder’s rights or obligations under the insurance contract, provided that such action is not contrary to the law;
    3. start handling the insured event immediately after receiving the notice of loss, and determine the amount of indemnifiable loss;
    4. after receiving the notice of loss, inform the policy holder of which documents must be submitted to LHV in order to determine the cause and amount of the loss;
    5. make a decision to compensate or refuse to compensate for the loss or damage, at the latest, within ten working days of receiving all the required documents and establishing the amount of the loss or damage and the circumstances in which it occurred;
    6. pay an insurance indemnity in the event of an insured event, based on the insurance contract;
    7. pay the insurance indemnity within two weeks of the claim handling procedures have been completed and a decision on compensation has been made. If LHV delays the performance of a financial obligation, it is required to pay default interest at the rate provided in the Law of Obligations Act;
    8. reimburse the policyholder, to the extent agreed, for the costs incurred in preventing or reducing the loss or damage suffered by the policyholder which the policyholder considered necessary, even if they did not produce the desired result. LHV must indemnify the costs incurred on the basis of its own instructions even if, together with other compensation, they exceed the sum insured;
    9. indemnify, in the event of the occurrence of an obligation to compensate for loss or damage, among other things, the costs incurred by the policyholder in establishing and quantifying the loss or damage. LHV will reimburse the costs of hiring an expert and adviser if the policyholder has agreed these costs with LHV in advance;
    10. refuse to pay the insurance indemnity if the payee is subject to a corresponding restrictive international financial sanction established on the basis of UN resolutions or the relevant legislation of the European Union or the Republic of Estonia.

15. Release from performance of insurance contract

    1. LHV has the right to deny or reduce the indemnity if:
       1. the insured person waives their right of recourse against the person who caused the damage or if the exercise of LHV’s right of recourse proves impossible due to the fault of the insured person (e.g. exceeding the time limit for filing a claim, failure to submit the necessary documents);
       2. the insured person compensates the injured party for the damage or recognises a claim for damages brought by the injured party in a situation where the liability of the insured person or the extent of liability is not clear;
       3. the policyholder has intentionally provided LHV with false or misleading information or has failed to provide important information concerning material facts of the insurance contract or the loss event;
       4. it is an event, as a result of which the damage caused is not compensated on the basis of the terms and conditions;
       5. the policyholder has not paid the premium by the due date or by the additional time limit and the insured event occurs after the additional time limit has expired, unless the policyholder has not paid the premium due to a circumstance beyond their control;
       6. the policyholder has failed to comply with any of the safety requirements listed in clause 10 of the terms and conditions or any of the obligations listed in clause 13 and there is a causal link between the failure and the occurrence of the loss.

16. Termination and cancellation of the insurance contract and withdrawal from contract

    1. The insurance contract shall expire:
       • at the end of the insurance period;
       • upon cancellation of the insurance contract;
       • upon withdrawal from the insurance contract;
       • by agreement between the policyholder and LHV;
       • on other bases provided for in legislation.
    2. LHV has the right to cancel the insurance contract, subject to the cancellation deadlines prescribed by law, if:
       1. the policyholder has failed to comply with the insurance contract, including failure to pay the premium by the due date or by an additional deadline;
       2. the policyholder has intentionally provided LHV with false information about the insurance contract and/or the circumstances of the insured event;
       3. an insured event has occurred and LHV has made a decision to compensate or refuse compensation;
       4. the insured risk has increased, including where the insured risk has increased independently of the policyholder, and the policyholder does not agree to amend the insurance contract retroactively from the date of the increase in the insured risk;
       5. other grounds for cancellation of the insurance contract established in the legislation emerge.
    3. LHV has the right to withdraw from the insurance contract if the policyholder has failed to notify LHV of material facts affecting the insurance risk at the time of conclusion of the insurance contract and/or has knowingly provided false information, including deliberately avoiding notification of a material fact. LHV may withdraw from the insurance contract within one month after it became aware, or should have become aware, of the policyholder’s failure to comply with the notification obligation.
    4. If the policyholder has not paid the first insurance premium within 14 days after the conclusion of the insurance contract, LHV may withdraw from the insurance contract until the payment is made. If the insurance premium paid (including the instalment) is less than the amount due shown on the policy, the premium is deemed not to have been paid. If LHV does not bring an action to recover the premium within three months of the date on which the premium became due, they will be deemed to have withdrawn from the insurance contract.
    5. If the insurance contract has been concluded by means of communication, the policyholder has the right to withdraw from the insurance contract within 14 days of its conclusion. The policyholder must submit an application for withdrawal to LHV. In case of withdrawal, LHV will refund the premium paid. If LHV has provided immediate insurance cover to the policyholder, the policyholder has no right of withdrawal.
    6. If the insurance contract has been cancelled or withdrawn from, the parties to the insurance contract no longer have any obligations under the contract from the date of termination. The rights and obligations of the parties, including the policyholder’s obligation to pay the premium to LHV, apply until the termination of the insurance contract.
    7. If the insurance indemnity has been paid out to the full extent of the sum insured during the insurance period, LHV is entitled to the premium for the current insurance period.

17. Multiple insurance

    If the policyholder insures the same insured risk, either in part or in full, with more than one insurer, and the total amount of insurance indemnity paid by the insurers exceeds the amount of the loss, the insurers are jointly and severally liable (multiple insurance).

18. Communication of notices

    All notices necessary for the performance of the insurance contract will be given in a format that can be reproduced in writing.

19. Processing of personal data

    1. LHV is entitled to process personal data relating to an insurance contract on the basis of the LHV Customer Data Processing Principles and to disclose information relating to an insurance contract to third parties who are entitled to receive the information on the basis of the LHV Customer Data Processing Principles.
    2. LHV has the right to retain recordings obtained by means of communication or any other means in connection with the performance of the insurance contract and, if necessary, to use them as evidence of the declarations of intent made by the policyholder.

20. Expiry of claims arising from insurance contract

    The limitation period for claims arising from the insurance contract is three years. The limitation period shall run from the end of the calendar year in which the claim becomes collectible.

21. Conflicts in the insurance contract documents

    1. If there are any inconsistencies in the documents of the insurance contract, the interpretation shall be based on the presumption that the special terms and conditions of the insurance contract specified in the policy take precedence over the general terms and conditions.
    2. If the terms and conditions have been translated into a foreign language, the Estonian-language terms and conditions shall take precedence in interpretation in case of a dispute.