All you need to know about employers' liability insurance

By: Nick Green

Date: 4 August 2011

The opportunity to be your own boss and make a living out of something you love doing is a dream come true, right?

Well, yes, of course it is. But it also involves masses of hard work, absolute commitment and a fair bit of paperwork. Being organised enough to make sure you’ve covered everything is a full-time job in itself.

The answer may be to take on more staff, but that means a change in dynamic. You’re very suddenly the one in charge. The buck stops with you and you’re the one tasked with covering all the bases – and that takes some getting used to.

However, like any person charged with running a business, you take your responsibilities seriously. You want to make work fun (if you can) and you also want to make sure your staff are safe and well and don't become sick or get injured as a result of working for you.

Your duty of care as an employer means that – quite rightly – your employees’ welfare is down to you. You’re obliged to do everything necessary to ensure their working environment is safe and any equipment you’ve supplied them with is fit for purpose.

Despite your best efforts, however, things can sometimes go wrong. What happens if an employee is injured or becomes ill and blames you? And worse, then sues you for damages?

As always, there’s an insurance policy that covers it. It’s called employers’ liability insurance and it’s a legal requirement for most businesses in the UK.

Who needs employers’ liability insurance?

Any company with one or more employees. The only exemptions are:

  • Limited companies, where the owner is the sole employee.
  • Unincorporated family business, where all employees are closely related.

What does employers’ liability insurance pay for?

If a claim is made against you and you need to defend yourself (which you will), the insurer appoints and pays for legal expertise to fight your corner. The insurer also pays any compensation due to your employee as a result of a claim.

Who says I need employers’ liability insurance?

The Health and Safety Executive enforces the law on employers' liability. They could fine you up to £2,500 for any day you're without the necessary cover and £1,000 for not displaying the appropriate certificate.

How much cover do I need?

The minimum level of cover is £5m, but you’ll find most insurers only offer £10m. That sounds a lot, but it doesn’t mean it’s expensive. Annual premiums start from around £30-£40.

It’s usually quick and easy to sort out too, so don’t take any chances. I advise talking to a specialist broker to help point you in the right direction.

Nick Green, PolicyBee professional insurance brokers

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