Who is employers' liability cover to protect?

Is employers’ liability insurance compulsory?

If your business employs anyone, you must be insured. ‘Employees’ include:

  • volunteers
  • friends
  • trainees
  • part-time staff
  • some sub-contractors

Employees who are close family members or who live overseas are often exempt.

If you’re in any doubt about whether someone counts as an employee, check with your insurer.

What happens if I don’t have employers’ liability insurance?

You can be fined up to £2,500 for every day you don’t have cover. You can also be fined for not displaying the policy certificate.

If you don’t have cover, and are then successfully sued, your business will have to pay the damages, compensation and legal fees awarded. This could amount to hundreds of thousands of pounds.

You’ll also have to conduct the legal proceedings yourself, or pay for your own legal representation.

Does it protect my business or my employees?

Employers’ liability insurance protects your business in the event you are successfully sued for causing injury or illness. As such, the insurer will pay the compensation, damages and legal fees awarded.

Without insurance, you may not be able to pay the claimant. This could disrupt cashflow, impact your ability to do business, and even put you at risk of bankruptcy.

However, having employers’ liability also offers employees peace of mind. It sends an important message: that you take their health, safety, and welfare seriously. Should something happen to them, they will be compensated and not left out of pocket.

So it’s not just about financial protection?

Having cover protects your reputation and bolsters morale among workers.

Some organisations will refuse to contract with you if you don’t have employers’ liability insurance. Some trade associations will not allow you to join without it.

As the above can affect your business’ standing and employee loyalty, being insured can have a knock-on effect of improving productivity levels and employee turnover rates.

How much cover do I need?

You need cover of at least £5 million. However, many standard policies provide cover of up to £10 million.