What is Employers' Liability Insurance?
If your company is found to be legally liable for an injury or illness suffered by an employee during their work, employers' liability insurance will cover the cost of any compensation claimed. The cover also includes any legal costs if you chose to defend your company’s position, as well as the costs and expenses incurred by the injured employee should you be found legally liable.
Do I need Employers' Liability Insurance?
Businesses are required by law to have employers’ liability insurance for people who they employ under a contract of service – which can be spoken, written, or implied.
However, family businesses that are not limited companies and employ only people directly related to the owner aren’t legally required to buy employers’ liability insurance. In addition, limited companies that are run by a sole director who also owns 50% or more of the issued share capital in the company are not required by law to have employers’ liability insurance.
How much cover will I need?
Companies must arrange cover for at least £5 million. This is referred to as the “Limit of Indemnity” (this is the maximum amount an insurer will pay out for any one claim usually within the policy year).
What risks would I be exposed to if I don’t have employers’ liability insurance?
The Health and Safety Executive (HSE) enforces the law on employers' liability insurance. HSE inspectors can check that you have it by asking to see your certificate of employers' liability insurance and other insurance details.