Employers' Liability Insurance

If your business has employees, it is your responsibility – as an employer – to protect the health, safety and wellbeing of your staff. Yet no matter how careful you are and how much you put employees’ safety first, sometimes accidents happen, and that’s where employers’ liability insurance comes in.

Employers’ liability insurance protects you against any claims for compensation from employees if they’re injured or fall ill as a result of their work. If your company is found to be at fault, you could be held liable, which makes this kind of insurance essential for all business owners. It’s designed to ensure that your financial commitments to your employees are maintained while complying with legislative requirements.

Yes. As per the Employer’s Liability (Compulsory Insurance) Act 1969, employers’ liability insurance is a legal requirement if you have employees of any kind, including volunteers and apprentices, and you must get a suitable policy as soon as you become an employer. This applies even if you’ve only got a single employee. The only exceptions to this are if you operate in a very small number of business sectors, your only employees are family members or living abroad, or if you only employ contractors who don’t work solely for your business (though this may not include certain types of subcontractor, so always seek suitable advice).

Failure to source suitable coverage leaves you open to hefty financial penalties. You can be fined £2,500 for every day you’re not properly insured, and can face an additional £1,000 fine if you don’t display a valid employers’ liability certificate or refuse to show it to inspectors when asked.

Your employers’ liability policy should cover every scenario in which your employees may bring a claim against you because of a work-related illness or injury. It covers both the compensation payments – which may take into account things like lost income, medical expenses and other damages – and legal costs associated with the case. This includes the legal costs incurred if your insurance provider chooses to defend your company’s position, as well as the costs and expenses incurred by the employee should you be found legally liable.

You must have at least £5 million in suitable cover from an authorised insurer, but in practice most insurers offer £10 million of cover as standard. Therefore, you rarely need to choose a specific level of cover, as most policies will offer protection at this same basic level. It may seem like a huge amount of cover, but compensation claims in this arena can be incredibly high, so it makes sense to ensure you’re suitably covered.

The cost of an employers’ liability insurance policy can vary depending on a whole range of factors, from the type of industry you operate in, to the number of employees you have, not to mention the level of excess you choose. You may also be able to incorporate employers’ liability insurance into a tailored business insurance policy, potentially combining it with additional cover such as professional indemnity and public liability insurance. Remember that different providers will always offer slightly different quotes, too, which is why it’s vital to compare employers’ liability insurance to ensure you’re getting the best deal for your business.