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Employers' liability insurance

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What is employers' liability insurance?

Employers’ liability (EL) cover or employers’ liability insurance is compulsory in the UK. It's required for any UK business that has one or more employees. It covers you if you employee becomes sick or is injured as a result of working for you or your company.

If you have a business and you are employing staff, you need to arrange Employers’ Liability insurance as soon as you take on employees. As a minimum, the insurance cover must be for at least £5 million, although many policies start at cover for £10 million.

EL cover will pay out if you become involved in a claim from an employee against you or your business. It covers full-time, part-time, contractors or temporary staff and covers the legal and compensation costs if an employee makes a claim against you. 

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Do I need employers’ liability insurance?

If you have one or more employees then EL insurance is compulsory by law and you can be fined if you do not have it.

However, there are some exceptions to the rule – if you only employ a family member or someone who is based abroad then you may not need it.

It's best to check the rules, however, as you don't want to be fined for non-compliance.

Make sure you use an authorised insurance company

Your EL insurance cover must come from an authorised insurer and one that is authorised by the Financial Conduct Authority (FCA). You can check to see if your insurer is authorised by looking at the Financial Conduct Authority register or by contacting the Financial Conduct Authority. 

An authorised insurer for Employers’ Liability insurance will also have their FCA authorisation clearly visible in their correspondence or on their website. You should not buy an EL policy from an insurance company that is not FCA authorised.

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

The penalties for failing to get EL insurance are strict. You can be fined £2,500 every day you are not properly insured. This can quickly mount up.

You can also be fined £1,000 if you do not display your EL certificate or refuse to make it available to inspectors when they ask. 

Even if you're a small firm and you don't do dangerous work, you're still required to have EL cover. This is because your employees could be injured at work and make a claim against you. As a result, the legal and compensation costs could run into millions of pounds.

Employers' Liability legalities

Not only is it illegal not to have Employers’ Liability insurance, but it could also cause your business to go bankrupt if you had a huge legal claim against you which you could not afford to dispute.

Understanding employers' liability insurance

What does employers' liability insurance cover?

EL insurance gives you protection from work-related risks to your employees, whether that is an accident at work, a health and safety-related issue, or an employee becoming sick as a result of being employed by you. 

For instance, if an employee suffered an injury or their property was damaged either at work or carrying out duties on behalf of your business and made a claim against you, employers’ liability would cover the legal costs to defend you and the compensation costs if their claim was successful.

How do I find employers’ liability (EL) insurance?

Your EL insurance cover must come from an authorised insurer and one that is authorised by the Financial Conduct Authority (FCA). You can check to see if your insurer is authorised by looking at the Financial Conduct Authority register or by contacting the Financial Conduct Authority. 

An authorised insurer for Employers’ Liability insurance will also have their FCA authorisation clearly visible in their correspondence or on their website. You should not buy an EL policy from an insurance company that is not FCA authorised.

What’s not covered by employers' liability insurance?

Employers’ liability insurance only covers you for claims made against you by your own employees. If a member of the public is injured on your premises, or if customers or clients make a claim for financial losses due to your operations or professional advice, then this is not covered by EL insurance. 

Therefore, most businesses need to combine employers’ liability insurance with other business insurance products. These could include:

  • Public liability insurance – covers you against claims made by a third party, such as a client, member of the public or contractor in relation to injury or damage to their property.

  • Professional indemnity insurance – covers you for legal and compensation costs associated with claims made by a business that loses money as a result of your professional mistakes.

  • Business contents insurance – covers your equipment, stock and devices such as computers, documents and even cash from damage or theft.

  • Directors’ and officers’ insurance – covers personal claims made against company directors or officers.

  • Cyber insurance – covers your business from risks associated with storing or handling data, such as data breaches involving sensitive information. 

Employers' liability insurance FAQs

Public Liability

Public liability insurance is a popular type of business insurance. It provides cover for legal and compensation costs in relation to a claim made against a business due to injury or property damage inflicted on a non-employee.

Travel insurance

Travel insurance is a form of cover to protect you while you are away on holiday or travelling abroad. it can also provide monetary compensation for other loss or inconveniences you may suffer when your travels don't go to plan.

Professional indemnity insurance

Professional indemnity insurance, or PI insurance, is designed to protect your businesses if a client loses money because of a mistake you made in your professional services.

Employers' liability insurance

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