How much employers' liability do I need?

What is employers’ liability insurance?

It is an insurance product that protects your business in the event you are successfully sued by a current or former employee for an illness or injury they suffered as a result of working for you.

In the event of a successful claim, your insurer will pay the damages, compensation and legal fees awarded.

Why do I need it?

If you employ anyone, you are legally required to have employers’ liability insurance.

The definition of who counts as an ‘employee’ is quite wide. It includes trainees, apprentices, part-time staff and volunteers. It may also include some sub-contractors, depending on the exact nature of your working relationship.

If your only employee is a close family member or lives overseas, you may not need to be insured. However, you should check with your insurance provider first.

Is there a minimum insurance requirement?

You must have cover worth at least £5 million. However, many employers’ liability insurance policies provide cover of up to £10 million as part of their standard cover.

Do I really need that much cover?

A claim by an employee or former employee can easily add up to a considerable amount.

For a minor incident, such as an employee breaking their ankle on site, their claim against you may include lost wages, transportation costs involved in getting to hospital (possibly by taxi) and their legal fees.

With more serious injuries or illness, claims (or in the worst case, multiple claims) can amount to hundreds of thousands of pounds – sometimes more.

Does cover not depend on how big my business is?

The amount of cover you need and the cost of your insurance, will depend to an extent on the size and nature of your business.

If you have a small business and undertake small, low-risk projects, the amount of cover and cost of your premiums will be less than that for a larger business undertaking higher risk work.

However, you will still be legally required to have cover of at least £5 million.

Do I need more than the minimum amount?

Again, this will depend on the nature and size of your business. While cover of £10 million will be enough for most small businesses, there may be some that need more. This will be considered when you apply.