What is Employers' Liability?

Do I need Employers' Liability Insurance?

Employers carrying out business in the UK are required by law to insure their liability to their employees for bodily injury or disease sustained in the course of their employment. This type of liability insurance provides protection for businesses against the potentially crippling costs associated with a claim.

What is Employers Liability Insurance?

Employers Liability Insurance enables businesses to meet the costs of compensation and legal fees for employees who are injured, or made ill at work through the fault of the employer. Since the end of January 2007 these costs may also include those of the NHS which can claim the costs of hospital treatment (including ambulance costs) when personal injury compensation is paid.

Employers Liability Insurance and the Law

The law requires an employer to have Employers Liability insurance and to be insured for at least £5 million and to provide cover for all of their employees in England, Scotland, Wales and Northern Ireland.

The Health & Safety Executive (HSE) is responsible for enforcing the law on Employers Liability Insurance. You can be fined up to £2,500 for each day that you do not have appropriate insurance.

Generally, someone is defined as your employee if:

1. you deduct National Insurance contributions and income tax from the salary you pay them
2. you control when, where and how they work
3. they cannot employ a substitute when they are unable to work

If your small business is not a limited company, and you are the only employee, or you only employ close family members, you do not need compulsory Employers' Liability Insurance. Limited companies with only one employee, where that employee also owns 50 per cent or more of the issued share capital in the company, are also exempt from compulsory Employers' Liability Insurance.

What to consider when Arranging your Employers Liability Business Insurance

Your policy must be issued by an authorised insurer otherwise it will not be valid and you risk breaking the law. Coverzones only works with commercial insurance companies that are approved and regulated by the Financial Services Authority (FSA). You can check to see whether a firm is FSA authorised or not using the Register on their website.

When you take out a policy you will receive a certificate of Employers' Liability Insurance. You must display a copy of this where employees can easily read it and keep copies for at least 40 years or risk a fine of up to £1,000. You need to make these certificates available to health and safety inspectors on request.

Need more information about Employers Liability Insurance? Visit our dedicated page on Employers Liability Insurance for more details about this product.