What should employers' liability insurance cover?

What is employers’ liability insurance?

It’s a type of business insurance that protects you and your business in the event a past or present employee sues your business for an injury or illness caused by working for you.

It is not the same as public liability insurance. This relates to damage or injury suffered by a member of the public.

What should it cover?

Your employers’ liability insurance policy should normally cover the damages, compensation and legal costs involved in any claim brought against you. That said, you should check the details of your policy to see exactly what it covers.

Some examples of possible exclusions to look out for include:

• the costs of any Health and Safety prosecution brought against you in addition to a claim
• the cost of having to attend court to defend any claim

While you may think your employees are unlikely to suffer illness or accident at work, incidents are surprisingly common, particularly in the construction industry.

In more serious cases where a current or former employee is no longer able to work, expenses such as lost earnings or the purchase of specialist medical equipment can reach hundreds of thousands of pounds.

Even with a minor injury, the amount you might be ordered to pay could easily amount to thousands of pounds.

How much cover do I need?

You are legally required to have cover of at least £5 million. However, most reputable insurers provide cover of £10 million as standard.

This may sound like a lot, but it can be a sensible amount given the risks and costs involved with common claims.

Who should the policy cover?

Anyone you employ, whether or not you have a written contract of employment in place with them. This means it should extend to:

• full and part time staff
• self-employed contractors
• any temporary staff or volunteers
• your apprentices
• anyone on work experience or in training
• friends who may help you out

The only exceptions are if you employ a family member or someone who is based abroad. Always check with your insurance provider first.