Understand Employers’ Liability insurance

Do you run your own business? Then you may be subject to the Employers’ Liability Act. This act makes it compulsory by law for all employers to have employers’ liability insurance as they are responsible for the health and safety of employees while they are at work.

You can find a full guide to the Act and to how it applies to you  here .


What is Employers’ Liability insurance?

Employers’ Liability insurance will help you to pay compensation if an employee were to become injured or ill as a result of the work they do for you.

Legally you must have at least £5m of Employers’ Liability insurance. Most insurers offer £10m as standard, it’s best to check when looking at your insurance requirements.  And your cover must come from an authorised insurer. There is a full list of legally authorised insurers  here .


How do I know if I need insurance?

If you employ people within your business you will probably need to take out Employers’ Liability cover. However, there are a few exceptions. You may not need cover if:

  • You only employ a family member
  • You only employ someone who is based abroad
  • Bona-fide sub contractors carrying out work for you are not employees
  • You are the only employee of your company and you own 50% or more of the company’s issued share capital
  • You are a health service body such as a National Health Service trust
  • You are a public organisation such as a local authority


What do I need to do?

If you think you may need Employers’ Liability insurance then you need to get covered as soon as possible. You can be fined up to £2,500 for every day you are not properly insured.

Once you have arranged Employers’ Liability Insurance, you will be provided with a certificate for you to display so that all employees are able to read it. You will also need to make this certificate available to Health and Safety Executive inspectors should they ask you for it. Keep hold of all of your past certificates too. You are legally required to retain the document up to 40 years of past insurance.


How do I get Employers’ Liability insurance?

When you look at taking out a policy, you should take into account:

  • Is the insurer legally authorised to offer Employers’ Liability insurance?
  • How much cover do they offer? (£5m is the legal minimum)
  • How long will it take to get my certificate?
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