What is Employers Liability Insurance?

You are required to have an Employers’ Liability Insurance policy of up to £5m if you have one or more employees – don’t get fined

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If you’re setting up a business, the myriad types of insurance and the threat of hefty fines or legal bills can be intimidating – but it doesn’t have to be.

Do you need Employers’ Liability Insurance? What does it cover? How much do you need? Find out below.

Does my business need Employers’ Liability Insurance?

Simply put: Yes!

The government requires you to get Employers’ Liability Insurance as soon as you become an employer of one or more people.

The policy must come from an authorised insurer and you could be fined £2,500 for every day you are not properly insured. You are also liable to be hit with a £1,000 fine if you do not display your Employers’ Liability Insurance or fail to produce it for an inspector when asked.

Do I need Employers’ Liability Insurance if I don’t employ anyone?

No. If you don’t employ anyone there is no need to get Employers’ Liability Insurance. If you employ close family members and are not incorporated as a limited company, you are also not legally required to be covered.

However, there are what might appear to be some exceptions. If you use volunteers, temporary employees or students on work experience, you do need Employers’ Liability Insurance.

What does Employers’ Liability Insurance cover?

You are responsible for the health and safety of your employees while they are in the workplace. Employers’ Liability Insurance will cover you and help you pay compensation in case an employee is involved in an accident, is injured or becomes ill.

It will also cover you if an employee makes a claim after they’ve stopped working for you. However, make sure you keep on file any relevant documentation to ensure you’re still covered, even if it’s expired.

Employers’ Liability Insurance will cover the following:

  • Full-time employees
  • Part time employees
  • Temporary employees
  • Volunteers
  • Work placements
  • Students doing work experience

What won’t it cover?

Employers’ Liability Insurance will cover you if your work is normally based in the UK or an offshore structure. However, if you take your employees abroad you will not be covered by a UK policy and should check the requirements of the country you are in.

Subcontractors and independent contractors who work for themselves or for other organisations may not be covered under your policy and may not need to be. If you are unsure, you should seek advice to avoid hefty fines or legal bills.

Do sole traders or the self-employed need Employers’ Liability Insurance?

No. If you are a sole trader and you don’t employ anyone else there is no need to get Employers’ Liability Insurance – though it may be wise to look into other kinds of insurance.

How much Employers’ Liability Insurance will my business need?

At present, you are legally required to get Employers’ Liability Insurance covering you for at least £5m. Most providers offer cover of at least £10m.

How can I choose a provider for Employers’ Liability Insurance?

The firm that provides your Employers’ Liability Insurance must be authorised by the Financial Conduct Authority (FCA). You can find out if your insurer is authorised by looking on the FCA’s register or contacting the organisation directly.

The type of business you operate could affect which provider would be most appropriate.

What other insurance does my business need by law?

Employers’ Liability Insurance is the only insurance every business needs by law, but you may be required to, or it may be advisable to, take out other policies dependent on the nature or size of your business.

  • Motor Insurance – any business that operates a vehicle needs to be covered, either by individual policies or fleet cover
  • Professional Indemnity Insurance – if your business provides financial or legal advice
  • Public Liability Insurance – not a legal requirement but important for businesses that regularly interact with customers

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