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Guide to Employers Liability Insurance: Everything You Need To Know

By Darragh Timlin on January 3rd, 2021

As the saying goes, teamwork makes the dream work, and your business couldn’t exist without your employees. They are your most crucial asset and drive your profitability, while also building your company culture and making work a happy place to be.

But things may not always be so rosy between you and your staff. If they are harmed while on the job, they could take legal action and demand compensation from your business. Comprehensive employer’s liability insurance is essential to protect you from the chances of this happening. Here we explore what this cover is, why it’s important, and explain everything you need to know about the cover.

What is employer’s liability insurance?

Employer’s liability insurance protects companies if an employee makes a claim regarding an injury or illness they suffered as a result of their work, whether on or off-site. For instance, somebody might be hurt after tripping over a cable, or become ill due to asbestos exposure. If negligence is proved, your insurance policy will cover the cost of any compensation, as well as legal fees. Here at Brisco Business, we compare the UK’s most trusted business insurance providers to get the best deal for your company. Receive a free quote today  to find a tailor-made policy in minutes.

Why is employer’s liability insurance important?

If somebody hurts themselves or falls ill while carrying out their contracted responsibilities, your business could be held accountable. Employer’s liability insurance will protect your company assets by covering any compensation claims brought against your business.

Do I need employer’s liability insurance?

Under the Employers’ Liability Compulsory Insurance Act 1969, all companies in England, Scotland, Wales, Jersey, Guernsey, Northern Ireland and the Isle of Man must have employer’s liability insurance if they employ staff, or face a £2,500 fine for each day that they don’t comply. Once you have the documentation in place, you are also required by law to display it somewhere visible to staff. This can either be in the workplace itself, or as an easily-accessible electronic publication.

Are there any exceptions to this?

Yes, your business could be exempt from this law if:

  • You only hire close family members, provided the business isn’t incorporated as a Limited Company
  • An employee has at least a 50% share in the business
  • You and a 50/50 shareholder are the only people in your enterprise
  • It is a public organisation, such as a government branch, a local authority or a health force
  • It is financed entirely through public funding

What is the difference between employer’s liability and public liability insurance?

The major difference between the two policies is in the name — employer’s liability insurance covers employee claims while public liability insurance protects against claims from members of the public. And while employer’s liability cover is mandatory by law, this isn’t the case for public liability insurance, though it can be a contractual requirement.

Do I require employer’s liability insurance if my workforce is unpaid?

Employer’s liability insurance covers anyone who works for your company, regardless of their income or employment status. As such, you’ll need it even if you only hire volunteers, third-party temps or contractors.

Can employer’s liability cover claims by ex-employees?

An ex-employee can still file a claim against you. For example, some illnesses may take time to develop, by which time the individual in question may not work for you anymore. If they can show that they became sick as a direct result of their employment at your company, they may still have a case. As such, it’s crucial that your policy covers ex-employees, as well as members of your current workforce.

What about overseas workers?

You don’t need employer’s liability insurance for any employees outside of the UK and Channel Islands, though it’s best to check local employment laws to ensure that your business is complying.

How much does employer’s liability insurance cost?

The cost of employer’s liability insurance depends on a number of factors, including:

  • How many people your company employs
  • The nature of your business
  • The conditions of the workplace
  • Your claims history

Generally speaking, the higher the risk, the more you’re likely to pay for employer’s liability insurance.

What level of employer’s liability insurance do I need?

Every business must legally have at least £5 million cover in place. That said, you might want to consider a higher level of protection depending on your company’s circumstances, including some of the aspects listed above. You can also take out an employer’s liability policy that covers multiple companies if necessary.

What should I bear in mind when buying employer’s liability insurance?

Be honest

It’s crucial that you’re honest with your insurer. Deliberately withholding any information could prevent you from claiming on your policy in the future.

Be meticulous

Make sure you thoroughly read through all the terms and conditions of your policy to ensure that it fully meets all of your business’s requirements.

Shop around

It’s vital that you compare policies from different providers to find one that is suitable and offers the greatest value for money. With our free quote comparison service, Brisco Business can help you do this instantly. Safeguard your assets and ensure continuity with our reliable business insurance policies at Brisco Business.

Darragh Timlin

With over 25 years’ experience, Darragh is an expert in all things insurance. Starting his career in commercial property underwriting, Darragh has worked for a number of global insurers and is now Managing Director of Brisco Business, part of the wider Henry Seymour Group.

All articles by Darragh Timlin

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