If you employ staff, even part time or temporarily, employer’s liability insurance isn’t just sensible. In most cases, it’s a legal requirement.

This guide explains what employer’s liability insurance is, who needs it and what to look for when arranging cover.

What is employer’s liability insurance?

Employer’s liability insurance protects your business if an employee becomes ill or injured as a result of their work and makes a claim against you.

That could include accidents in the workplace, injuries caused by faulty equipment or illnesses linked to working conditions. If a claim is made, the policy can cover legal costs and compensation up to the agreed limit.

It’s there to protect both your employees and your business if something goes wrong.

Who needs employer’s liability insurance?

In the UK, most businesses that employ one or more people are legally required to have employer’s liability insurance.

This includes full-time and part-time staff, temporary workers and in many cases apprentices. Even if someone only works a few hours a week, the requirement usually still applies.

There are limited exceptions, such as some family businesses where all employees are closely related, but these are specific and it’s important to check the rules carefully.

How much cover is required?

The legal minimum level of cover is usually £5 million, although many insurers provide £10 million as standard.

The amount of cover you need may also depend on your industry and any contracts you have in place. Some clients or regulators may require proof of cover before you can begin work.

What does employer’s liability insurance cover?

Employer’s liability insurance generally covers claims made by employees for injury or illness caused by their work.

This can include:

• Legal defence costs
• Compensation payments
• Associated legal expenses

It doesn’t cover injuries to customers or members of the public. That falls under public liability insurance.

What happens if you don’t have it?

Failing to hold employer’s liability insurance when required can lead to significant fines. You may also be personally liable for compensation claims if an employee is injured and there is no valid cover in place.

You’re also required to display your employer’s liability certificate where employees can see it, or make it easily accessible digitally.

What affects the cost?

The cost of employer’s liability insurance depends on factors such as the type of work your employees do, your claims history and your payroll size.

Higher risk industries, such as construction or manufacturing, generally pay more than low risk office based businesses. Maintaining good health and safety practices can help keep premiums manageable.

Employer’s liability insurance isn’t just about meeting a legal obligation. It’s about recognising your responsibility to the people who work for you and protecting the business if something unexpected happens.