Employers' Liability Insurance
Hard-working staff are a vital part of most businesses. But employing people comes with responsibilities. It’s up to you, as an employer, to keep your workers safe. If one of your employees has an accident and injures themselves at work, they can make a compensation claim against you, which can often be expensive. Employers’ liability insurance can cover your business against these costs. If you employ anyone who is not a direct family member, then you are required by law to get employers’ liability insurance.
In This Guide:
- What is employers’ liability insurance?
- When would I need employers’ liability insurance?
- When wouldn’t I need employers’ liability insurance?
- What is covered by employers’ liability insurance?
- What if I don’t have employers’ liability insurance?
What is employers’ liability insurance?
Employers’ liability insurance covers businesses when a claim is made against them by one of their employees. This could happen if someone falls ill or is injured as a result of working for your company. It is a legal requirement for any business in the UK who have any employees on their books, including temporary staff or contractors.
Cover from Churchill Expert
We’ve joined forces with Churchill Expert, who can help to arrange business insurance cover, allowing your company to keep running in the event that an employee makes a claim against you.
As your business grows, you could get up to £10m employers’ Liability cover with the NIG product Churchill Expert can sell you. Whilst £5m cover is the statutory minimum, most insurance policies start at £10m.
Protect your business with insurance from Churchill Expert
When would I need employers’ liability insurance?
Most businesses in the UK will need to have employers’ liability insurance, but there are some exceptions. You will need to get employers’ liability insurance if:
- You have employees on your payroll, and you deduct income tax and National Insurance from their wages.
- You have control over where your employees work, what times they work and how they work.
- You supply most of the equipment and materials that your employees use.
- You have a right to claim on the profit made by any of your employees.
- Your employees can’t find a replacement when they are unable to perform any jobs you require them to do.
- You employ any temporary or part-time staff.
Employers’ liability insurance can cover you if a claim is made by any of your employees should they be injured at work, for example if they slip on the floor or fall down the stairs as a direct result of negligence on your part as the employer. Your employee may not be fit to work after an accident, but your insurance will allow you to keep on paying them while they’re temporarily out of work.
When wouldn’t I need employers’ liability insurance?
As mentioned before, there are a few exceptions where you wouldn’t be required by law to have employers’ liability insurance. A key exception is if you don’t have any employees at all. A full list of exemptions can be viewed here: https://www.gov.uk/employers-liability-insurance.
What is covered by employers’ liability insurance?
The exact nature of your cover will depend on which policy you get and from which insurance provider. However, the law requires that you must have at least £5m worth of cover, but this can often be more depending on what industry you work in. Your policy can cover you and your business for any costs involved when an employee makes a compensation claim against you. This will typically be after an accident in the workplace that could have been prevented, or if an employee becomes ill as a proven direct result of working for your company.
Your employers’ liability insurance can cover the costs of the compensation, as well as any medical and legal costs involved. It can also cover any loss of income resulting from an employee not being able to work because of an accident or illness.
If your business is deemed high risk, for example if you work in construction, you will typically pay more for your employers’ liability insurance. This is because your insurer believes you are more likely to make a claim than, for example, somebody that owns a small boutique clothing store. This is due to a number of factors including working at height, use of power machinery, and working in unfamiliar surroundings, amongst others.
When taking out an employers’ liability insurance policy, you must let your insurer know exactly how many staff you have and what they do. Failure to disclose certain information could result in your policy being invalid and any claims you make may not be paid out.
What if I don’t have employers’ liability insurance?
If your business fits the description of one that is required to have employers’ liability insurance, you must take out a policy or else you’ll be in breach of the law. If you don’t have a policy, you could be fined up to £2,500 for every day that your business is uninsured. You also need to make sure that you clearly display your Employers’ Liability Compulsory Insurance (ELCI) certificate. If an inspector finds that your certificate is not clearly visible, then you could be fined a further £1,000.