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employers-liability-insuranceEmployers liability insurance is a legal requirement for employers in the United Kingdom but how much cover do you need, who counts as an employee and how much does it cost?

What is employers liability insurance?

Employers liability insurance protects the policyholder in against claims made against them in respect of their legal liability for death, disease or personal injury suffered by an an employee during the course of their employment.  The policy provides protection to the insured in respect of any awards made against them and for the legal costs of any defence to a claim made against the policyholder.

What level of employers liability insurance do I need?

The law requires a minimum limit of indemnity in of £5 million for employers liability insurance and also requires that this limit be in respect of any one claim or occurrence under the policy. In practice insurers issue policies with a standard limit of £10 million although higher limits are available.

Who needs employers liability insurance?

Under the terms of the Employers Liability (Compulsory Insurance) Act 1969 and its subsequent amendments anyone who employs people in the United Kingdom is required to hold employers liability insurance to the required minimum levels.

There are exceptions to this requirement and these include;

  • Businesses where the only employees enjoy close family ties with the employer
  • Limited companies where the only employee of the company is also at least a 51% shareholder in the business
  • Certain government agencies and departments

Do I need employers liability insurance for family members?

There is a close family members exemption for those who employ only close family members as defined in the Act. This exemption does not apply to limited companies or any incorporated body. The fact that you may not require the insurance at law does not preclude you from buying the insurance in respect of close family members and this is regarded as most prudent.

Do I need employers liability for temporary workers and part-time employees?

Yes the requirement for employers liability is in respect of all employees irrespective of their working hours or the length of their contract.

Do I need employers liability for voluntary workers?

The act does not specifically require insurance in respect of voluntary workers, however the definition of employee clearly includes the relationship that exists between a voluntary worker and an employee. it is also significant that the definition of employee under employers liability insurance policies includes voluntary workers. The cover is required.

Does employers liability insurance provide protection for employees?

No, this is a common misunderstanding. The policy provides no benefits or protection directly to employees. The policyholder is the only party protected by the policy and this in respect of their legal liability only. This is not an employee benefits or sickness package. Any suggestion that the policy provides protection for employees is fundamentally incorrect.

How much does employers liability insurance cost?

Like all insurance policies the cost of employers liability insurance is based upon the risk that is proposed to the insurance company. The key factors in rating employers liability insurance are the type of business you are engaged in and the actual work undertaken by employees, the amount of work undertaken, where you work and whether you have previously has any claims made against you.

How do I buy employers liability insurance?

although this cover is a legal requirement for most employers it is not generally available as a stand-alone insurance product. The cover is generally bought alongside a public liability insurance policy or as part of an overall package insurance such as office shop or commercial combined.

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