Employers liability insurance

Employers’ liability insurance covers the cost of compensating employees who are injured at or become ill through work.

Do I need it? 

If you are an employer you are legally obliged to have employers’ liability insurance. You can be fined up to £2,500 for every day you do not have appropriate insurance.

Employers’ liability insurance usually covers the cost of compensation and any associated legal fees – check with your insurer to see exactly what your policy covers.

Exempt businesses

Some businesses are not required to have employers’ liability insurance, including:

• companies with no employees
• family businesses that employ only family members

To check if your business is exempt from employers’ liability insurance see the Health and Safety Executive (HSE) website.

Who does it cover?

Your policy should cover claims brought by:

• all permanent employees
• contract, casual and seasonal employees
• labour-only subcontractors
  • an employee is someone:
    • who has National Insurance contributions and income tax deducted from their salary
    • whose location, hours and conditions of their work are controlled by their employer
    • who cannot be replaced by their employer if they are unable to work

Your policy should also cover claims brought by: 

• temporary staff, including students and people on work placements

  • for more information see the ABI’s guide to insurance and work placements (pdf 79.5kB) 

• volunteers, advisers, referees and marshals 

  • for more information on insurance and volunteers see voluntary organisations  

Check with your insurer to make sure your employers’ liability policy covers everyone who works with your business.

Buying employers’ liability insurance

You can buy employers’ liability insurance directly from an insurer or from a specialist broker through the British Insurance Brokers’ Association (BIBA). You are obliged to have cover for compensation of at least £5 million, but most policies offer cover for at least £10 million.

The cost of your premium is based on a number of factors including:

• the nature of your business
• the number of people you employ 
• your previous insurance claims history   

Employee claims for injury or illness

If you are an employee and you have suffered an injury at work or become ill as a result of your job, you should speak to your employer who will contact their insurer about making a claim.

If the company you worked for has gone out of business you may still be able to make a claim for compensation directly through the company’s insurer. You can trace your former employer’s insurance provider through the Employers’ Liability Tracing Office (ELTO).

For more information about mesothelioma and making a claim against an employer for asbestos exposure, see mesothelioma and asbestos.

For more information on business insurance see the ABI guide to insurance for small businesses (pdf 79.5kB).