Employers' Liability Insurance

Many insurers incorporate employers' liability cover into their business insurance policies, making it a cost effective solution for your company.

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Who needs employers' liability cover?

Employers' liability Insurance is required by law and in general, you will need it for someone who works for you if:

You deduct at source National Insurance contributions and Income Tax from the money you pay them.

You pay them on a per hour, per day, per week basis.

You supply most of the equipment’s and materials.

You require the person only to deliver the service and they cannot employ a substitute if they are unable to do the work.

Who is exempt?

A limited company where only 1 person is employed and that person also owns more than 50% of the share capital.

A company which is not limited and has only 1 employee (sole trader) who is the principal of the business.

A company which is not limited and of more than 1 employee where employees are close family members.

Partnerships where the directors are equal partners in the business and do not employ others.

What does/doesn’t it cover?

Employers’ liability insurance covers you for claims relating to injury or illness of staff as a direct result of their work while in your employment. For example if an employee is injured by machinery owned by your business, and it is your fault that they have been injured, employers' liability insurance will cover any compensation and legal costs you have to pay. 

Typically employers' liability insurance covers you for up to £10 million and you must purchase a minimum cover level of £5 million.

Important information

You can be fined if you are required to have employers' liability insurance and do not. Fines can be up to £2,500 per day for every day you don’t have it
Family members that work for you do not need to be added to an employers' liability policy, however part-time workers and temporary staff do