Q: Do I need both types of insurance?

If you employ someone, even if it’s only one person, you are legally required to have employer’s liability insurance. It should cover you or your business for at least £5 million. If you don’t have it, you risk being fined up to £2,500 for every day you are uninsured. This is in addition to the risk posed to your business and reputation, should someone claim against you. There are very limited circumstances in which you may not need employer’s liability insurance – for example, if your sole employee is a family member or is based abroad. Even then, we would still recommend that you speak to an insurance advisor before deciding against cover.

Question 1

Is employers’ liability insurance the same as public liability insurance?

Accepted Answer

Employers’ liability and public liability are two separate insurance policies.

Employers’ liability will protect you against claims brought by an employee as a result of injury or illness for directly working with you.

Public liability covers third-party property damage and injury claims from members of the public.

Question 2

What is public liability insurance?

Accepted Answer

It’s a form of business insurance that provides protection in the event a member of the public brings a successful claim against you or your business for personal injury or damage to property caused by your work.

A public liability policy covers the damages, compensation costs, and legal fees that result from a successful claim. It will not cover a claim brought against you by an employee.

Question 3

What is employers’ liability insurance?

Accepted Answer

This provides your business with protection should an employee successfully claim for an injury or illness suffered as a result of working for your business.

It covers the damages, compensation costs and legal fees relating to claims brought by:

full-time and part-time employees
self-employed contractors you hired
temporary staff
apprentices
those on training schemes
volunteers

Question 4

Do I need both types of insurance?

Accepted Answer

If you employ someone, even if it’s only one person, you are legally required to have employer’s liability insurance. It should cover you or your business for at least £5 million.

If you don’t have it, you risk being fined up to £2,500 for every day you are uninsured. This is in addition to the risk posed to your business and reputation, should someone claim against you.

There are very limited circumstances in which you may not need employer’s liability insurance – for example, if your sole employee is a family member or is based abroad.

Even then, we would still recommend that you speak to an insurance advisor before deciding against cover.

Question 5

Must I have public liability insurance?

Accepted Answer

You are not legally obliged to have public liability insurance. However, we would strongly recommend you have it in place.

Some larger businesses and public sector organisations will require you to have public liability insurance before they will enter into a contract with you. Some trade associations require you to have it as part of their terms of membership.

If you don’t have public liability insurance and someone successfully brings a claim against you or your business, you could be forced to pay out hundreds or thousands of pounds in damages, compensation and legal fees. For many small businesses, these types of costs can be devastating.

What's the difference between public liability insurance and employers’ liability insurance?