Employers’ liability insurance

If you have employees, you’ll usually need to have employers’ liability insurance in place – it’s a legal requirement.

You should also have cover in place if you have labour-only subcontractors (LOSCs) working for you. Our Knowledge centre has more information on subcontractors and employers’ liability insurance. If you have employees and you’re not covered, you could face a hefty fine of £2,500 a day, per employee, for each day that you don’t have cover in place.

There’s one exception though – if you have a family business that isn’t incorporated as a limited company, you aren’t legally required to have employers’ liability insurance.

A “family business” is one where all your employees are closely related to you (as a spouse, civil partner, sibling, child, parent, grandparent, grandchild, step-parent, stepchild, or half-sibling).

So if you run an unincorporated family business and you choose not to get employers’ liability insurance, it’s important to know that your public liability insurance wouldn’t cover you against damage or injury caused by your team.

The price of your employers’ liability insurance depends on the work that your business does and the risks your employees face. The cost can also depend on the cover level you choose, but in practice most providers offer a standard amount of £10 million.

As with other types of insurance, your insurer calculates your premium based on the likelihood that you’ll make a claim and the cost of any possible claim. This means that if your business is perceived as risky, it’s possible that your insurance premium will be higher. For example if your employees work with hazardous materials like asbestos, or they work in dangerous environments like oil rigs, your insurance is likely to cost more.

You can decrease the chance of a claim and possibly lower the cost of your employers’ liability insurance by taking precautions to keep your staff safe, and ensuring that workers are properly trained and supervised and have the right tools and safetywear.

If you have employees – including some subcontractors – you’re required by law to have employers’ liability insurance. The only exception to this is if you’re running an unincorporated family business. If you are, then you aren’t legally required to have employers’ liability cover in place.

Employers’ liability cover protects you and your employees in case they become sick or injured as a result of working for you. If you’re not covered, you could be fined £2,500 per employee for each day that you don’t have cover in place.

Employers’ liability insurance must be bought alongside public liability insurance.

If you have people working for you, including bona fide subcontractors (BFSC), labour-only subcontractors (LOSC), part-timers, or full-time staff, employers’ liability insurance is required by law.

Read on for our simplified guide to the difference between labour-only subcontractors and bona fide subcontractors.

Read more about employers’ liability insurance as a legal requirement

Remember that the cost of your employers’ liability policy is likely to be a fraction of the cost of the penalty for failing to have the right cover. You can be fined up to £2,500 each day that you don’t have an employers’ liability policy in place if your business is legally required to have one.

You also need to display your employers’ liability certificate somewhere all your employees can see it, and you can be fined if you fail to do this. It’s ok to display it digitally, for example on your company’s intranet, as long as all your staff have access and you’ve told them where to find it.

Under the Employers’ Liability Act most businesses with one or more employees should have at least £5 million of cover and they must display their insurance certificate. There are some exemptions, however, including some family businesses, so check the government guidance if you’re not sure whether your business is included.

Employers’ liability insurance protects you against the cost of compensation claims that arise from employee illness or injury as a result of working for you.

For example, if one of your employees slips and breaks their wrist at your business premises, employers’ liability insurance can cover medical bills and legal fees that can arise from a claim against you.

Read more about what does employers’ liability insurance covers

 While employers’ liability cover is a legal requirement for many businesses, there are some exceptions, including: 

• businesses with only direct family members as employees (unless you’re a limited company) 
• businesses with no employees – including limited companies with just a sole director and no employees

It’s important to note that your limited company must always have employers’ liability insurance in place if you have multiple directors. Limited companies will also need to have employers’ liability cover if you’ve employed family members to work for you. 

If your business isn’t a limited company and you’ve employed family members, you should still consider investing in employers’ liability cover. While the chances of a family member taking out a claim against your business may be slim – you’ll still be liable if a family member takes you to court for an injury or illness that took place while working for you. 

Yes. This includes temporary and part-time staff, apprentices and volunteers. You may not need to have cover in place for independent contractors and subcontractors – but it’s a good idea to speak to one of our insurance experts on 0333 0146 683 if you’re unsure.

Most employers’ liability policies will cover staff who work from home, but you should check the details of your policy to be on the safe side. 

Yes, the legal required amount if £5m but all Simply Business customers receive 10m as standard

This will depend on the insurer you choose to go with. When you start a quote with us, make sure you tell us how many employees you’d like to cover – we’ll then match you to the insurers who are best suited to your business.

An excess is an amount you pay towards any claim you make on your insurance. For example, if your excess is £250 and you make a claim worth £1000, your payout will be a maximum of £750.

The figures above are for guidance only and any excess applying to your quote may differ. You’ll get a breakdown of the excesses for each quote when you compare with us.

This will depend on whether you have employers’ liability insurance in place. Public liability insurance is designed to protect your business against the consequences of legal action brought by members of the public for injuries or damage to their belongings. But when it comes to your employees causing injury or damage, this protection only activates if you also have employers’ liability insurance.

If you employ people, you’re required by law to have employers’ liability insurance.

There’s one exception here. Family businesses that aren’t incorporated as a limited company are not legally required to have employers’ liability insurance. The government defines a “family business” as one where all your employees are closely related to you (as a spouse, civil partner, sibling, child, parent, grandparent, grandchild, step-parent, stepchild or half-sibling). So if you run an unincorporated family business and you choose not to get employers’ liability insurance, it’s important to know that your public liability insurance wouldn’t cover you against damage or injury caused by your team.