Who does employers' liability cover?

What is employers’ liability insurance?

It is a type of business insurance. It covers your business if you are sued by an employee or former employee for an injury or illness suffered as a result of working for you.

Why must I have it?

You are legally required to have employers’ liability insurance if you employ someone. You can be fined for every day you are not insured.

Having cover demonstrates you are a responsible employer who cares about the health, safety, and wellbeing of your employees. Some businesses may refuse to work with you if you don’t have it.

You also need to be insured due to the expense of claims for personal injury or illness, especially if they relate to loss of earnings, or a serious injury or illness. You may also have to pay costly legal fees.

All of this can add up to a substantial sum. If you don’t have insurance, a claim must be paid by your business. This could result in financial ruin.

Who is covered under an employers’ liability policy?

Insurance protection covers your business and you (as the employer). It protects you by paying any award for damages, compensation, or legal fees (up to the limit of the policy).

The policy relates to claims made by current and former employees. This includes part-time employees, trainees, volunteers and some sub-contractors.

Close family members may be excluded. Whether you need employers’ liability insurance to cover them can depend on whether you operate as a limited company.

Another exception involves employing someone based overseas. Check with your insurance provider or a qualified professional, such as an accountant or solicitor, if you are unsure.

Whether sub-contractors are covered will depend on the nature of the relationship you have with them, and how independent they are from your business. Again, seek professional advice if you have any doubts.

What does employers’ liability cover?

The compensation payments and legal costs of a successful claim. This may include medical costs, medical equipment, adaptations to the employee’s home (if appropriate), lost earnings, and legal costs.

Depending on your policy, it may also provide you with legal representation, or advice and compensation for attending court.

You must have cover up to £5 million. However, most polices provide £10 million of cover.  

The types of things an employee may sue for are:

• an injury, such as a broken ankle or arm,
• an injury due to working with faulty equipment,
• an illness, for example caused by working with asbestos.

Injuries and illnesses can range from the minor to the very severe.