Employers Liability Insurance - The Basics

The law in the United Kingdom requires any business that hires one or more employees must have Employer's Liability insurance. This is to cover any expenses associated with workplace accidents and while you may not want to think of this possibility, ensuring you provide a safe workspace for your team, accidents can and will happen from time to time.

What is Employer's Liability Insurance?

Before digging deeper into Employer's Liability insurance, it's important you have a good understanding of what this type of insurance is. Remember that workplace accidents can happen, no matter how careful you are. On average there are more than one hundred and forty deaths and over six hundred thousand workplace injuries across the United Kingdom each and every year.

There are many lawyers who work on a no win, no fee basis, which has made it even easier for employees to claim from their employer should they be injured while at work. Employer's Liability insurance protects you, the business, in the event of a compensation claim made by an employee for damage to health or injury.

Employer's Liability insurance will cover associated legal fees and compensation costs.

The Risk of Not Having Insurance

By now you are probably wondering exactly what type of claims employees could make against their employers. Without this type of insurance in place, a single claim from an employee could set you back financially, with the potential risk of bankruptcy. As a result the UK law now stipulates that all businesses that have one or more employees must have Employers Liability insurance.

When You Don't Need Employers Liability Insurance

There are some instances where Employers Liability insurance is not needed, though there are very few businesses that are exempt. If you are a sole trader and you do not hire anyone to assist you, then you will not need to consider this type of insurance policy.

You also do not need Employers Liability insurance if you are an unincorporated family business and all your employees are close family members.

What Your Employers Liability Insurance Should Cover

Not all insurance companies offer the same level of cover, so it's important to have a good understanding of what your policy should cover, protecting you in the long run. Ideally you are going to want a minimum of £5 million cover, though some insurance companies will only offer a minimum cover of £10 million.

Your permanent team and any short term workers should be covered under your Employers Liability policy. This includes any seasonal workers you may employ during busy periods. If you use labour subcontractors that use your tools and materials, then they should also be covered. Temporary staff and volunteers should also be included.

The Cost of Employers Liability Insurance

As a business owner, working to a tight budget, you want to know how much your Employers Liability insurance will cost you. This is dependent on the type of business you operate and the risks involved. In many cases, taking out a complete insurance package that includes professional indemnity, public liability and Employers Liability insurance, is the cheapest and easiest option.

Some insurance companies will offer a no claims discount to the policy, which can reduce your premiums considerably. This is to recognise businesses that have managed their potential risks well and have health and safety protocols in place. This reduces the risk on the insurer and benefits your business with a budget friendly insurance premium.

What Happens If I Don't Get Employers Liability Insurance?

If you have one or more employees and you operate your business in the United Kingdom, it is a legal requirement to have this type of insurance. There are severe penalties for ignoring the law with fines up to £2,500 per day that you don't have this insurance in place.