Employers’ liability insurance

What you should know about employers’ liability insurance

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Having employers’ liability insurance is mandatory for most businesses – here’s the important information you should know.

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What is employers’ liability insurance?

Employers’ liability insurance covers you and your business for compensation costs if an employee becomes ill or injured as a result of the work they do for you. It’s legally required of all businesses with one or more employees.

Who needs employers' liability insurance?

Employers' liability Insurance is required by law for most businesses. You’ll need it if:

  • You deduct at source National Insurance contributions and Income Tax from the money you pay your employees
  • You provide most of the equipment and materials
  • You control when, where, and how your employees can work
  • You have the right to claim any profit made by your employees
  • You need them to perform the job you employ them for, and if the employee is unable to work they can’t find a substitute
  • You have part-time or temporary staff.

Who is usually exempt from employers’ liability insurance?

Employers’ liability cover isn’t normally required for:

  • A limited company where only one person is employed and that person also owns more than 50% of the share capital
  • A company which is not limited and has only one employee (a sole trader) who is the principal of the business
  • Partnerships where the directors are equal partners in the business and do not employ others
  • Many public organisations, health services, and government bodies
  • A company where all employees are direct family members.

Who might also be exempt from employers’ liability insurance?

You might also not need employers’ liability cover for employees that are:

  • Unpaid student workers
  • Work experience school children
  • People in a training programme who you don’t employ
  • Volunteers.

You should check with your provider to make sure before taking out a policy, so you aren’t underinsured if you need to make a claim.

What does employers’ liability insurance cover?

The exact policy details can vary between different insurers, but an employers’ liability insurance policy should provide at least £5 million worth of cover as this is a legal requirement for businesses with employees.

This can be for compensation costs if an employee becomes injured or ill as a result of their work, including medical costs, legal costs, and loss of income, as well as any other damages.  

If a former employee begins to show symptoms that have resulted from an incident when they worked for you, this may also be covered – however you should check your policy documents to make sure.

Examples of when you might need to claim

You might find employers’ liability insurance would come in handy in the following circumstances:

  • If cleaning or maintenance staff are injured while doing their job, for example falling over equipment
  • If clerical staff suffer an injury or illness as a result of excessive use of computers
  • If building staff are injured by scaffolding
  • If an employee slips on a wet floor and as a result they are unable to work for a given amount of time.

Common exclusions

You might find you’re unable to claim on employers’ liability insurance if:

  • You don’t notify your insurer of any claims against you, often within a given time limit
  • The claim should have been covered by motoring insurance, but there was no policy in place
  • The act that caused the illness or injury was deliberate
  • The illness or injury happened offshore.

Things to consider when taking out employers’ liability insurance

Keep the following in mind when you take out employers’ liability insurance:

  • As a minimum, businesses should have £5 million in cover
  • You may have to pay a fine of £2,500 for every day you are uninsured
  • You might also be fined £1,000 if you don’t display your EL certificate, or don’t make it available to any inspectors who may ask to see it
  • You must tell your insurer the exact details of your staff, including how many clerical and manual staff members you have.

Comparing employers’ liability insurance

One of the best ways to find a good deal on employers’ liability insurance, and any other cover you might need for your business, is to shop around. At MoneySuperMarket you can compare business insurance quotes from a variety of insurers – all you have to do is enter a few details about your business, the kind of work you do, and the people you employ (if any).

Then you’ll be able to browse through deals from multiple providers and see their annual and monthly cost, as well as the cover that is included as standard and available as optional extras. This can improve your chances of finding a better deal on your business insurance.

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