What is employers’ liability insurance?

Definition of employers’ liability insurance

Employers’ liability insurance covers your business against legal and compensation expenses if one of your employees falls ill or sustains an injury as a result of working for you.  

Do I need employers’ liability insurance?

Employers’ liability insurance is a legal requirement for most UK businesses with employees. The policy must provide at least £5 million of cover and come from an authorised insurer. Not having sufficient cover can lead to fines of up to £2,500 a day until you take out a policy.  

Some businesses are not legally obliged to hold an employers’ liability insurance policy:

• Sole-employee businesses (unless requested by clients, or if you own less than 50% of the shares in your limited company)
• Family businesses that only employ close members of the family
• Partnerships with equal partners who do not employ others
• Most public organisations
• Health service bodies
• Some organisations financed by public funds

What does employers’ liability insurance cover?

A policy covers the cost of settling and defending any claim arising from injuries sustained by an employee, from slipping on a wet floor to a long-term illness suffered because of their work. Claims can still be made after an individual has stopped working for your business, as symptoms may only appear after several months.