September 11, 2019
Back to News
Is employers’ liability insurance a legal requirement?
Employers’ liability insurance is a commercial insurance that virtually all companies must take out. It is a legal requirement for most businesses in the UK that employ at least one person.
 
The fines for not having employers’ liability insurance in place are hefty so it’s not something business owners and operators can afford to overlook.
 

What’s covered by employers’ liability insurance?

Employers’ liability insurance covers any costs that come from claims made by any of your employees while they’re at work. The amount of costs covered will depend on the amount defined in the policy schedule.
 
Employers’ liability insurance protects business owners and operators against some of the most common risks associated with employing people. For example, if a member of staff trips over a computer wire or slips on a wet surface and injures their arm, the employer is liable.
 
By taking out employers’ liability insurance, any accident, injury or illness that occurs on the business premises or as a direct result of the employee’s working practices is covered by the policy and the employer is not liable for the costs.
 
Employers’ liability insurance will cover the cost of settling and defending the claim, compensation pay-outs, and legal fees.
 
As the name suggests, employers’ liability insurance only offers cover for individuals who are employed by your company and does not include visitors to the premises or property. It also doesn’t cover incidents that occur while an employee is driving. However, businesses owners can create a commercial insurance policy package that includes a motor insurance policy, too.
 

How often do work-related accidents happen?

The risk of work-related accidents depends on the type of job. For example, an office worker is less at risk of suffering burns than a chef. However, there are a range of common accidents and injuries that happen across all sectors.
 
According to data from the Health and Safety Executive (HSE), trips, slips and falls are the most frequently occurring work-place accidents (31%), followed by handling, lifting or carrying (21%) and being struck by a moving object (10%).
 
The HSE stats also reveal that more than 71,000 non-fatal injuries to employees were reported by employers in 2017/18. These figures highlight just how important it is for employers to make sure their employees and business are covered with tailored employers’ liability insurance.

How much does employers’ liability insurance cost?

Insurance providers work out the cost of insurance based on a set of criteria including the number of employees, the nature of the business, the perceived level of risk, previous claims made, length of time without making a claim, and the amount of cover needed.
 
The basic rule of thumb is that the higher the potential pay-out, the more a business will have to pay for the cover. Of course, there may be a temptation to bring down the cost of employers’ liability insurance by reducing the level of cover. However, this would mean business owners find themselves liable for a significant amount if the worst should happen.

When working out the level of cover needed, employers need to strike the right balance between short-term budget and the need for long-term financial protection.
 
Many insurance providers offer £10 million cover as standard, which is sufficient for most small businesses. Larger businesses are able to increase the level of cover if required. The minimum level of employers’ liability insurance cover required by UK law is £5 million.
 
If you want to find out how much employers’ liability insurance will cost your business, you can get a fast, free quote online from commercial insurance specialists Insurance Choice.

Which businesses are exempt from employers’ liability insurance?

For most businesses with employees, employers’ liability insurance is compulsory in the UK. However, UK law states that some organisations are exempt from this legislation, including:
 
·Some businesses that only employ close family members – for example, sole traders or partnerships. The HSE defines close family members as: husband, wife,  civil partner, father, mother, grandfather, grandmother, stepfather, stepmother, son, daughter, grandson, granddaughter, stepson, stepdaughter, brother, sister, half-brother or half-sister).

·Some companies with employees who live overseas (however, it is important that businesses check the laws in the country in which staff members are based).

·Businesses that only employ contractors as they may not legally count as employees of the business.

·Some limited companies are not legally required to have employers’ liability insurance. For example, a director of a limited company who owns at least half the shares and employs no staff members is exempt.
 

What are the consequences of not having employers’ liability insurance?

Because employers’ liability insurance is a legal requirement in the UK, you could find yourself in serious trouble with the HSE if you don’t have it.
 
The fines imposed are not to be ignored. For every day you do not have cover in place, you could be fined £2,500. As well as the significant financial damage such high fines could cause, there’s also the risk of business interruption and reputational damage to consider.
 
Businesses are required to make their employers’ liability insurance certificate accessible to their employees – either printed and displayed in the workplace or available as a digital copy. Businesses are also required to provide a copy of the certificate to the HSE when requested. If businesses fail to do either of these, they could face a £1,000 fine.
 

How can I find a suitable employers’ liability insurance policy?

If you’re a small business owner looking to arrange employers’ liability insurance cover, the first thing you need to do is get a quote from a commercial insurance specialist.
 
Of course, chances are you will need more than just employers’ liability insurance for your organisation – you also need to consider buildings insurance, contents cover, and business interruption protection.
 
At Insurance Choice, our team of commercial insurance specialists can tailor an insurance package to meet your business’ specific needs. All you need to do to get a quote is to visit us online or call 01384 429900.