Is employers’ liability insurance a legal requirement?

What is employers’ liability insurance?

It’s a type of business insurance that protects your business if a past or current employee sues you for injury or illness suffered as a result of working for you. It covers the damages, compensation costs and legal fees.

Who must have employers’ liability insurance?

Anyone who employs someone needs employers’ liability insurance, regardless of the business size or type of work carried out.
Employers’ liability insurance is required even if employees are only part-time, volunteers, trainees, or apprentices.

If you only employ a close family member, or if the person you employ lives overseas, employers’ liability insurance may not be needed. You should confirm this with an expert.

If you use sub-contractors, you must be careful when considering their employment status for insurance purposes. Legally, they may be treated as ‘employees’ in some circumstances.

If you are in any doubt about the employment status of your contractors, seek professional advice.

Why do you need employers’ liability insurance?

Accidents happen, especially in industries like construction.
Even a minor incident can sometimes amount to a large claim for damages and compensation. For example, a broken wrist or ankle can result in significant time off work. In a serious case, surgery may be required.

Damages will quickly add up for lost earnings, hospital visits, incidental expenses, and legal fees.

If you are not insured, your business will have to pay. The financial impact of a large claim can be devastating.

There is also the stress involved, as well as time off work you’ll need to deal with any court proceedings.

Is employers’ liability insurance a legal requirement?

Legally, you are required to get employers’ liability insurance as soon as you become an employer. Your policy must cover you for at least £5 million, and come from an authorised insurer.

What happens if you don’t get insured?

You can be fined £2,500 for every day you are not properly insured. You can also be fined £1,000 if you do not display your employers’ liability certificate, or refuse to make it available to inspectors when they ask.