What is Employer’s Liability Insurance?


When it comes to employees, you may think your years of experience in the industry will mean you do not have to worry about a thing. However, it is true that you cannot be everywhere at once and thing are probably going to go wrong at some point.

Employers’ Liability Insurance is actually not optional. It is compulsory by law, however, this does not mean that it needs to be expensive. There are plenty of good deals for policies out there. You will want to make sure that whatever your business is, you are prepared and protected in the best way.

Employers’ Liability Insurance Explained

Employers’ liability insurance (EL) will help you to pay compensation to employees who get injured or fall sick as a result of your business activity. It may be the case that employees get hurt by accident or as a result of their work being rather mentally or physically demanding.

If any damaged is caused which is a direct result of the work they are doing for the company, the employee will have the right to sue, claim or demand a form of compensation. For this very reason, it is very important for companies to have EL in place in order to protect both their employee interests and their business interests.

For clarity, examples of events which would require you to have employers’ liability insurance would include a person having a fall at work as a result of a ladder which was faulty and provided by the company. It could also be something like an employee suffering side effects from materials which are being used in the manufacturing process.

As mentioned, EL is actually required by UK law. To highlight just how important this is, there government can issue a daily find of a whopping £2,500 to companies that do not have an active policy in place and a £1,000 fine for firms that do not display their EL certificate or make it available upon request.

The fines may actually be backdated so it is crucial that there is never a period of time where you do not have a policy active. It is important to keep any certificates of old policies because it is the case that former employees are able to make claims in the event that some illnesses or juries take a long time to emerge.

Who is covered in Employers’ Liability Insurance?

All employees, whether they are paid or unpaid, that have hours and their location determined by the company will be covered by an employer’s liability insurance. A typical policy will, therefore, cover employees that are full-time, part-time, freelancers, contractors, temporary staff, students and volunteers.

Will I be exempt from Employers’ Liability insurance?

Even though employer’s liability insurance is compulsory by the government, there are some companies who are exempt. For example, a company that does not have any employees does not need to be covered – this includes freelancers and sole traders. What this means is that the individual, who simply sets up a company via Companies House, do not need to worry on day one about getting a policy or being fined.

In addition, any family businesses that only employ family members are also exempt from having an employer’s liability policy. This could include something like a family run restaurant or shop.

What does Employers’ Liability Insurance cost?

The policy that you take out for your small or medium-size business must provide cover for at least £5m and some businesses may require up to a larger number of £10m.

Type of business

Depending on the industry you work in and the risks to employees, it will affect the premium you pay as a company. Those lines of work involve heavy machinery, chemicals and manual labour may require a much higher level of cover compared to that of an office job, where you will only need a lower level of cover.

Size of business  

How many people your company employs will work to impact the cost of your employer’s insurance. A company which employs hundreds of staff may be at a greater risk of an accident when you compare it to a small enterprise with a smaller office and not very many members of staff.

Company History

 How long you have been trading in the company and how often claims have been made in the past will allow a provider to find out what the best level of cover suits your needs.