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Employers’ liability insurance: all you need to know

To School of Risk home

12 September 2011

Workers quinn.anyaThe personnel touch

We’ve already looked at the difference between professional indemnity insurance and public liability insurance.

It was worth it because they sound similar enough to be confusing, and they’re two of the three most frequently requested types of cover we deal with.

The other one is employers’ liability insurance.

It’s worth a look because it’s the only business insurance required by law.


What is it?

In one easy sentence, employers’ liability insurance protects you against claims made by your employees for injuries and illnesses they suffer at work.

It pays any compensation you’re liable for and your legal defence costs, too.

(OK, so that was two sentences.)


Who needs it?

Well, because the policy wording uses a really broad definition of ‘employee’, it’s safe to say that most UK businesses probably do. To make sure as many people as possible are covered, ‘employees’ aren’t just limited to permanent staff under contract. They don’t even have to be paid.

Part-timers, volunteers, work experience kids, secondees, temps, helpers, apprentices, staff borrowed by you and labour-only subcontractors under your supervision are all classed as employees. Don’t fall into the easy trap of thinking that because they’re not really ‘your’ staff, they’re not really your responsibility. They are – and so is their welfare.

Apart from publicly funded organisations, the only businesses that don’t need employers’ liability insurance are:

  • Companies where the owner is the sole employee, owning 50% or more of the issued share capital.
  • Family businesses not incorporated as limited companies where all employees are closely related to the business owner (for example father, son, brother, sister, husband, wife etc).


How much cover do I need?

A minimum of £5m for each claim. You’ll find most insurers only offer £10m.


What happens if I don’t have it?

The Health and Safety Executive (HSE) enforces the law on employers’ liability. If a health and safety officer comes knocking, you could be fined £2,500 for every day you should’ve had cover but didn’t, and £1,000 for not displaying your insurance certificate. Gulp.

In fairness, it’s likely you’ll be given a few days’ grace to sort your policy rather than fined there and then. But it’s best not to chance it, particularly when cover costs from a measly £32 (from us).


Anything else I need to know?

When you get your policy documents from your insurer/broker, stick your employers’ liability certificate in an easily-noticed spot on your office wall.

And if you don’t have a wall, you can store it electronically. Just make sure your guys know how to access it.


Not sure if any of this applies to you?

The HSE have a handy guide for employers. It’s everything you need to know about employers’ liability in one document.

If that doesn’t cover it, please feel free to give us a call. We’re happy to talk you through it.


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