Employers' liability insurance

Employers' liability insurance

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What is employers’ liability insurance?

Employers’ liability insurance protects your business if an employee is injured, falls ill, or even dies while at work or in the workplace. It covers the costs of any compensation claims, legal fees or medical bills if your business is found to have caused the problem.

You also need to be aware that ex-employees can claim against your business long after they’ve left, for example, cases of retrospective mesothelioma claims relating to exposure to asbestos.

Employers’ liability insurance only covers your employees and not members of the public - this is covered by public liability insurance.

Is employers’ liability insurance a legal requirement in the UK?

There are exceptions, but employers' liability insurance is a legal requirement for most UK businesses with at least one employee.

You’ll need to take at least £5 million worth of cover (although most policies will provide a limit of £10 million automatically), and the penalty for not having adequate insurance in place is a fine of up to £2,500 for each day you go without cover.

It's worth noting that employers' liability insurance might be included as part of an overall business insurance package, such as a shop and salon policy or workshop insurance, which could also include public liability insurance and stock insurance, to cover a range of risks.

To get all the cover your business needs, with no unnecessary extras, give the tech-enabled team at Bionic a call.

Are any businesses exempt from taking out employers’ liability insurance?

Although employers' liability insurance is compulsory there are a few exceptions, including:

  • Businesses that only employ immediate family members (unless your family business is incorporated as a limited company, in which case the insurance is compulsory). 
  • Sole traders - if you are the only person working for the business and providing you aren't incorporated into a limited company.
  • The majority of public organisations, including government departments and nationalised industries.
  • Health service bodies such as primary care trusts.

If you employ staff and none of the above exceptions apply to you then it's safe to say you'll need to take out this type of insurance.

Do you need employers’ liability insurance?

Although there are exceptions, most businesses with one or more employees are legally required to take out employers’ liability insurance. But every workplace is different, which mean employers’ liability policy needs to cover against all sorts of incidents in all sorts of industries.

Here are some examples of when a business might need to make a claim on their employers’ liability insurance:

You run a cafe business

If you run a café and an employee injures themselves after slipping on some water that’s been spilled but not cleaned up, they might make a claim against you. 

As an employer, it’s up to you to make sure the workplace is safe. In this instance, you could be held responsible as the spilled water wasn’t cleaned up and caused the accident. The injured employee could claim compensation costs against you as a result. You could be liable for the compensation costs and legal fees to defend this type of claim. 

You’re an electrician

If you’re a spark with a young apprentice that has failed to carry out necessary safety precautions and suffers burns from an electric shock as a result.

The accident could be deemed to be your fault, for instance, if the apprentice decides to blame you by stating that you did not provide proper health and safety training. In this situation, you could be responsible for compensating the apprentice for the injury, as well as loss of earnings due to time they have had to take off work.

In both examples, the money that you need to pay could reach tens of thousands of pounds – which could easily put many SMEs out of business. These costs would be met as part of your employers’ liability policy, meaning cover could be the difference between your business carrying on or going bust.

You run a hotel

If you run a hotel, your staff might help customers take their luggage from reception to their room. If a member of staff trips on a loose bit of carpet on the stairs and injures themselves, you could be held responsible for the accident. If this is the case, you might have to pay compensation and any legal fees that arise from an injury claim.

Do you need employers’ liability insurance for freelancers?

There are instances when you might not need employers' liability insurance for freelancers or contractors. If the freelancers or contractors you use aren't on your payroll, meaning you don't arrange their National Insurance and income tax, then they technically aren't employees and would need to make sure they had their own insurance in place.

If they don't operate from your workplace or at premises that are owned or rented by you, then you don't control their working environment. But you could still be held responsible for injury or illness as a result of the work you have employed them for if you don’t provide the right direction, safety equipment, or training needed to complete the work. 

You become responsible for their health and well-being while at your place of work, this could be at a site or within an office environment. Although HSE cannot fine you (because technically they are not employees), you could still be liable for an injury claim, should injury or damage occur whilst they are at your premises, for example burning themselves on a kettle in the kitchen, or falling off a broken chair.

If you don't have employers' liability insurance in place, you'll have to foot the bill for any compensation and legal fees. If you're in any doubt, speak to one of our insurance team for guidance

Do you need employers’ liability insurance for temporary workers?

If you have anyone working for you, even on a temporary basis, then you need employers' liability insurance. This is also the case for part-time workers and even for people on work placements and work experience students. You also need to take out cover if you have volunteers working for you.

How much does employers' liability insurance cost?

The cost of employers' liability insurance is influenced by a range of things, including:

  • The type and size of business you run
  • The number of employees you need cover for
  • The nature of the work you carry out

Figures from Statista, market and consumer data specialists, show that the average cost of cover for a single office worker is £61 a year, but this rises to £213 for an employee that performs tasks associated with the main line of business. This is because office and administrative tasks are considered a lower risk than other duties. Costs increase to £753 a year to cover five employees.

How to compare employers’ liability insurance

The simplest way to make sure your business is covered against the unexpected is to speak to the team at Bionic - we talk your language and won't waste your time, working with you to just find the right policies you need, with no unnecessary extras.

Protect your business now - give our tech-enabled team a call and we’ll compare quotes from the UK’s most trusted insurers and adapt your insurance to suit the needs of your business.

Employers’ liability insurance

What is employers’ liability insurance?
Is employers’ liability insurance a legal requirement in the UK?
Are any businesses exempt from taking out employers’ liability insurance?
Do you need employers’ liability insurance?
Do you need employers’ liability insurance for freelancers?
Do you need employers’ liability insurance for temporary workers?
How much does employers' liability insurance cost?
How to compare employers’ liability insurance

Employers’ liability insurance FAQs

To help you understand more about employers’ liability insurance, here are the answers to some of our most frequently asked questions.

Does employers’ liability insurance cover staff that work from home?

An employers’ liability policy should cover staff wherever they’re working, including in their own homes. Most insurers will include home-working cover, but you should always check the policy wording to make sure.

How common are workplace injuries?

The latest figures from the Health and Safety Executive (HSE) show that in 2020/21 there were 441,000 people injured while at work. In total, there are 1.7 million people suffering from work-related illnesses or injuries, which can range from stress to musculoskeletal disorders.

What’s usually covered in an employers’ liability insurance policy?

There are broadly three types of claims that are covered by an employers’ liability policy:

  • Third party injury
  • Third party property damage
  • Employee illness or injury

How many employees can be covered on a single policy?

This can vary between insurers, but it’s important that your policy covers all of your employees in all working environments. This includes at your business premises, on other sites, at home, and any other places they carry out work duties.

How much is the excess on an employers’ liability insurance policy?

This will depend upon the insurer and your circumstances. One thing to always bear in mind is that you should set the excess at a level that you can reasonably afford to pay. Although having a higher excess can sometimes bring down the cost of your policy, you could find yourself in difficulty if a claim is made and you can’t afford to pay the excess.

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

Employers' liability insurance covers you against damage claims made by your employees, while public liability insurance covers you against damage claims made by members of the public. Another difference is that while employers’ liability is a legal requirement if you have one or more people working for you, you don’t need to have public liability cover by law.

What other types of insurance might I need for my business?

When taking out insurance, it’s important you include cover to protect against the biggest risks to your business. Here are some other types of business insurance that could be useful:

  • Business equipment insurance
  • Business interruption insurance
  • Commercial property insurance
  • Public liability insurance
  • Legal expenses insurance
  • Product liability insurance
  • Professional indemnity insurance
  • Property maintenance insurance
  • Stock insurance
  • Tradesperson insurance
  • Workshop insurance

Do I need employers’ liability insurance if I don't employ anyone?

No. You will only need employers’ liability insurance if you employ staff. If you are self-employed or work on your own, you won't need this type of insurance. However, you might need other types of insurance, like public liability, product liability or professional indemnity insurance, depending on what your business does and the activities it carries out.

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