Employers’ liability insurance
Employers’ liability insurance can help pay compensation and associated legal costs if an employee claims their work caused an injury or illness. Protection depends on the circumstances, applicable law and policy terms.
Most employers must arrange this cover, often called EL insurance, although exemptions apply.
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Do you need employers’ liability insurance?
Employing just one person can mean you need cover. Short working hours or an informal arrangement do not automatically make your business exempt.
When should cover start?
If your business needs cover, arrange it to start when the employment begins. Use an authorised insurer and confirm the start date before relying on the policy.
Requesting a quote does not arrange insurance. Check that cover is confirmed for the date you need it.
Are any businesses exempt?
Some employers are exempt. The criteria depend on the business’s structure, ownership, workforce and the legal rules that apply where people work. Being a director, working for yourself or employing a relative does not decide the position on its own.
In Great Britain, examples include:
- Certain unincorporated businesses, such as sole traders and partnerships that have not formed a company, employing only specified close family members. The family-business exemption does not apply to incorporated limited companies.
- A company with only one employee, where that employee owns at least 50% of its issued share capital (the shares the company has issued).
These examples do not cover every exemption or condition. Check the rules for your business before relying on one. An exemption from compulsory insurance does not itself remove potential liability for an injury or illness claim.
Different rules in Great Britain and Northern Ireland
Great Britain and Northern Ireland have separate legal frameworks. The Employers’ Liability (Compulsory Insurance) Act 1969 applies in Great Britain; Northern Ireland has its own legislation. Do not assume that an exemption described for one applies in the other.
If your staff work across jurisdictions or outside the UK, explain where they are based and where they work when arranging insurance. Check the applicable requirements rather than relying only on your business address.
Our guide to legally required business insurance covers the requirements and exemption questions in more detail.
What does employers’ liability insurance cover?
EL insurance covers your legal liability for work-related employee injury or illness. It does not automatically pay for every workplace accident, and an allegation does not establish that your business is legally responsible.
Employee injuries arising from work
An employee may seek compensation if they believe an injury resulted from their work or working conditions. The claim may concern how a task was organised, the equipment used or the conditions in which it took place.
Example: an employee falls while moving stock and claims that an unsafe working arrangement caused their injury. The insurer assesses the claim and applicable cover.
Work-related illness
Claims can also concern illness caused by employment, including conditions that develop over time. A former employee may bring a claim after leaving. A claim may arrive years after the working conditions or exposure that allegedly caused the illness.
Example: a former employee alleges that exposure during their employment caused an illness diagnosed later.
Both examples are illustrative and do not guarantee that a claim will be paid.
For a claim about earlier employment, give the insurer or broker the relevant dates and available policy records. These can help identify the insurance that applies; do not assume only your current policy needs checking.
Compensation and legal costs
A claim may involve compensation and relevant legal costs, including the cost of defending an allegation. Check how defence costs are treated against the stated limit and follow the insurer’s claims procedure.
Policy wording and compulsory-insurance law both affect how a claim is handled.
Personal accident insurance is a separate type of protection based on selected benefits and policy definitions. It does not replace required employers’ liability insurance.
Which workers should you include when arranging cover?
Tell the broker or insurer about everyone working for your business, including the following groups:
- full-time and part-time employees;
- temporary, seasonal and casual staff;
- apprentices;
- people on work experience or placements;
- agency workers;
- subcontractors;
- volunteers; and
- working directors and family members.
These groups may have different legal status and insurance treatment. This is a disclosure checklist, not a statement that everyone listed is automatically treated as an employee. Explain their roles, who directs their work and any other organisations involved in the arrangement.
Agency workers and placements
If you use an agency or arrange a placement, clarify the responsibilities of each organisation and confirm the relevant insurance before the work begins. Do not assume the agency’s insurance covers your business’s responsibilities.
Subcontractors and self-employed workers
Calling someone self-employed does not decide how they should be treated when arranging EL insurance. Explain how the arrangement operates, including who controls the work, supplies equipment and decides how tasks are done.
These are matters for discussion, not a complete employment-status test. Tax status alone does not settle the insurance question. Our guide to employees and subcontractors explains the working arrangements to check.
For the two arrangements, read labour-only vs bona fide subcontractors.
How much employers’ liability cover do you need?
Where compulsory EL insurance is required, the statutory minimum is £5 million for claims arising from any one occurrence (an event giving rise to a claim), including related costs and expenses. One occurrence may involve more than one employee.
This is a minimum requirement, not a recommendation that £5 million is sufficient for every business. The potential consequences of employee injury or illness and any contractual requirements also matter.
Comparing the offered limit
Check the limit stated in the quote and schedule, how it applies to claims and how legal costs are treated. Check that the policy names the correct business or businesses employing your staff.
If a customer or principal contractor specifies insurance conditions, compare those with the policy offered. Do not assume a package meets the contract because it includes an EL section.
Compulsory-insurance rules prohibit certain conditions from removing cover, including specified conditions about actions taken after an incident. An insurer may nevertheless have a right to recover money from the employer. If the policy mentions an employer contribution or repayment, ask the broker or insurer to explain it. Do not treat it as a standard excess that simply reduces an employee’s compensation. These rules do not establish liability or guarantee payment for every claim.
Read more about business insurance limits and excesses, keeping the specific rules for compulsory EL insurance in mind.
What must you do with your employers’ liability certificate?
The certificate provides evidence of the relevant insurance. After arranging cover, take these three steps:
- Make it accessible. Display the current certificate where employees can easily read it, and show it to inspectors when required. Electronic display can be appropriate if employees know where to find it and have reasonable access.
- Check it after renewal or changes. Confirm the employer details and insurance dates, then make the current certificate available. Contact the provider if details are wrong or the document is missing.
- Keep insurance records. A claim may emerge long after the employment concerned, so earlier policy details can help identify the relevant insurance.
Our guide to business insurance certificates covers the administration in more detail.
What does employers’ liability insurance not cover?
EL insurance focuses on employee injury and illness liability. Other business losses and disputes may need different insurance, even if an employee was involved in the incident.
| Type of claim or loss | What to check |
|---|---|
| Customer or visitor injury | This is a public liability question, rather than a claim by an employee for their own work-related injury. |
| Damage to customer property | An employee damaging a customer’s belongings is different from an employee injury claim. Check public liability or other relevant cover. |
| Professional advice or service errors | Professional indemnity may be relevant where a client claims a professional mistake caused a loss. |
| Unfair dismissal, redundancy or employment disputes | EL does not automatically provide cover for employment disputes. Check any separate insurance for these claims. |
| Damage to your own property | Buildings, equipment and other business assets may need separate property insurance. |
Insurance does not remove your workplace health-and-safety responsibilities.
How much does employers’ liability insurance cost?
The price depends on the work your business does, its workforce and the protection included. Insurers assess the potential for employee injury or illness claims; there is no standard price per employee that suits every business.
- Business activities: office work, manual tasks and work involving machinery or hazardous substances create different risks of injury or illness.
- Workforce: numbers, roles and working arrangements show who faces those risks and what work they do.
- Total employee pay: insurers may ask for wage roll (the total pay for your workforce) to help assess the scale of employment. Check whether a breakdown by role is needed.
- Claims history: previous claims and relevant incidents help insurers assess the risk and may affect their terms.
- Cover included: the EL limit and other insurance affect the overall quote. If the quote includes other insurance, the total price covers the whole package.
Compare the cover and terms as well as the price. Check the total annual cost and any charges for instalment payments. Our guide to employers’ liability insurance costs covers pricing in more detail.
Employers’ liability vs public liability: what’s the difference?
The main distinction is who is claiming and why. The policies can be offered together, but they address different liabilities.
| Insurance | Main distinction |
|---|---|
| Employers’ liability | Your legal liability for employee injury or illness arising from work. |
| Public liability | Your legal liability for injury to third parties or damage to their property connected with insured business activities. |
For example, an employee’s injury claim raises an EL question, while a customer’s injury claim at the same premises raises a public liability question. Neither example guarantees cover.
Read about public liability insurance or compare public liability vs employers’ liability.
What information do you need to compare quotes?
Have the following information ready when you compare quotes through Simply Business:
- business activities and working locations;
- your workforce, including numbers, roles and employment arrangements;
- wage roll information where requested;
- relevant claims history;
- the limit required and contractual conditions;
- your preferred start date; and
- existing insurance details, where applicable.
Describe the workforce and activities accurately. When arranging business insurance, you must make a fair presentation of the risk. This generally means clearly disclosing material information your business knows or ought to know, or giving enough information to alert the insurer to ask further questions. Answering the questions alone may not be enough. If you are unsure what information could affect the insurer’s decision, ask the broker or insurer before buying.
Tell the provider when staffing or activities change and check whether the insurance needs updating. Our guide to business changes to tell your insurer about explains what to discuss.
Your questions
Employers’ liability insurance FAQs
You may be able to arrange insurance for the intended employment start date, subject to the insurer accepting the business and proposed workforce. Explain the planned roles and work locations. Confirm the agreed start date before employment begins.
Tell the provider if employees work from home and explain the tasks they do. Check that the arrangements fall within the policy’s scope; homeworking alone does not determine whether a claim is covered. A claim would still need to concern the employer’s liability for work-related injury or illness.
Report the claim promptly using your policy’s claims procedure. Keep relevant records and correspondence. Follow the insurer’s instructions. Obtain any required agreement before admitting liability or settling. Our guide to business insurance claims explains the general process; the policy determines the applicable reporting procedure.
Find cover for the work you do
Compare employers’ liability insurance quotes
Compare employers’ liability quotes through Simply Business as part of a tailored policy alongside public liability. Check which workers and activities are insured, the cover limit and how legal costs are treated. Check any other insurance included. Confirm the start date and how you will receive your certificate.
A quote alone does not start cover.