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What is employers’ liability insurance?
Employers’ liability insurance is designed to cover legal and compensation costs if an employee suffers a work-related illness or injury on the job.
It covers claims by an employee for a variety of illnesses or injuries, from tripping and breaking a bone in the office, being injured by equipment, or even suffering from extreme stress after working in a high-pressure environment.
Remember...
Employers liability insurance can protect your business against claims by employees, which could run into tens of thousands or even millions of pounds.
Do I need employers’ liability insurance?
Employers' liability is required for most employers in the UK. It doesn't matter if your workers are temporary, part-time, contracting or even volunteers, you must have at least £5 million of cover if you hire any type of employee.
An exception to this is if you employ immediate family members, or if the staff you employ are based abroad.
Even if you are one of the few employers that are exempt, it can come in handy should an employee make a claim against you for a work-related injury or illness.
Without employers’ liability insurance, not only could you be susceptible to a costly claim, but you could also be fined up to £2,500 for each day that you were operating without cover. You could also be fined up to £1,000 if you fail to present your employers' liability certificate if requested by the Health and Safety Executive (HSE), the national health and safety regulator in Britain.
Often, businesses choose to display their certificates on their business premises so that employees can see it too.
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How does employers’ liability insurance work?
Employers’ liability is designed to offer employers protection against compensation and legal costs if their employees suffer a work-related injury or illness. It could also cover your employee's medical expenses and loss of income.
As an employer, you pay the premium – the cost of the policy – to maintain the cover. As with most insurance, there are limits on the coverage provided, so you should check your policy documents to make sure the cover is fit for your needs.
If the worst happens and an employee needs to claim, they would do so with the insurance company – maybe with the help of a solicitor.
Once the insurer has all the information they need, they’ll investigate the claim. If the claim is covered under the policy, the insurance company will work with you – the employer – to pay out to the employee.
Claims from third parties are not covered under this type of insurance. Cover for claims such as this – brought by any visitor to your business who isn't an employee, including clients, customers, delivery services and other callers or passersby – you’ll need public liability insurance.
How much does employers’ liability insurance cost?
The cost of employers’ liability insurance varies from business to business.
The factors that determine the cost of your employers' liability premium include the number of employees you have, what business activities are carried out by you and your employees and the level of cover you’ve opted for.
Different businesses will have different risks. For example, a salon owner will have different risks to a branding agency. Businesses with a higher level of risk – like roofers – may pay higher premiums.
Insurers base their prices on the probability that you’ll make a claim and the cost that claim might amount to. Understanding and identifying the risks you could face is a good way to see how they might affect your business and insurance premiums.
Remember...
Not having employers’ liability insurance can make your business vulnerable to the effects of a claim, which could be costly enough that the business is forced to close down.
Other types of business insurance
Running a business means you have many different risks and responsibilities to manage. You may have stock, equipment and perhaps machinery to buy and maintain. You may have an office, a shop, a salon or a workshop, and valuable computers and other technology.
You may have employees or customers who you want to keep safe, and personal information and data secure on your IT systems. For this reason, most businesses need a range of insurances, which might include:
Public liability insurance: can protect you if a member of the public or a client has their property damaged or gets injured in your workplace
Professional indemnity insurance: covers you in case you are accused of professional negligence
Business contents insurance: protects your business equipment and stock
Directors’ and officers’ liability insurance: this covers claims made against company directors or officers
Cyber insurance: pays out in the event of data breaches that result in loss or damage of information from your computer systems.
What type of incidents would employers’ liability cover?
Whatever the size of your team, keeping your workers safe is important. While you can put in place as many health and safety measures as you like, accidents can still happen.
A fall causing a broken bone, a bad back caused by uncomfortable seating, a mental health diagnosis from extreme stress or a member of your staff developing an infection from a client, despite you providing protective equipment.
While employers' liability claims vary for different types of businesses, these are a few examples of claims where the business could be liable.
FAQs
Do I legally need to have public liability insurance?
Employers’ liability insurance is mandatory for most businesses employing one or more people in the UK. The only exception to this is if you employ immediate family members.
What's not covered by my employers’ liability insurance?
Employers’ liability only covers you and your employees for injuries, illnesses or damage sustained in the workplace.
It doesn’t cover third parties, like members of the public or your clients. For that, you’ll need public liability insurance.
How can I get the right employers’ liability insurance coverage?
Getting the right employers’ liability insurance starts with assessing the risks your business faces, as these will vary for different types and sizes of businesses.
How much cover does my business need?
Broadly speaking, if you have one or more employees you’ll need to get employer’s liability insurance – unless you employ immediate family members. The minimum level of cover you’ll need is £5 million.
Will I have to pay to claim on employers’ liability insurance?
It really depends on the type of claim you’re making and your policy. You’ll usually be required to pay an excess – this is the amount of the claim you need to pay yourself. It could be £250, for example, but the higher the excess you agree to pay the cheaper your policy is likely to be.
Will employers’ liability cover staff who work from home?
With hybrid and remote working the norm now, you may have many employees who work from home. Employers are legally responsible for the health and safety of all employees, including those working from home.
Some policies will cover staff that work from home, while other policies may not. It’s important you read your policy documents and understand the limits of the cover you have, ensuring you have the cover that is right for your business.
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