Who is exempt from employers’ liability insurance?

Employers' liability insurance is not always required in certain situations. You may be exempt if you only employ close family members (such as a spouse, parent, or child) and your business is not a limited company. Sole traders without employees, certain public bodies, partnerships with equal partners and no employees, or employees working abroad under non-UK contracts may also be exempt. Whether you need this cover for contractors and sub-contractors depends on their contract. It may not be needed where you employ independent contractors or bone fide sub-contractors, as they supply their own tools and equipment, and don’t work under your direction.

What level of coverage does my business need?

The amount of employers' liability insurance you’ll need depends on several factors, including the size of your business, the industry you operate in, and the level of risk associated with your employees’ roles. Here’s how to determine the right level for your business: Legal requirement: By law, you must have a minimum of £5 million in coverage if you employ anyone (other than immediate family or other specific exempted parties). If your business is likely to encounter risky situations — as can happen in sectors like construction or manufacturing — you may need more coverage. Number of employees: Larger businesses with more employees may need higher coverage to ensure all members of staff are protected. Potential claims size: If your business deals with high-value claims, or operates in an industry that is prone to expensive lawsuits, it’s probably worth considering a higher coverage level. Additional coverage: You might also want to consider adding extra coverage, such as public liability, for even more comprehensive protection and extra peace of mind. It’s important to carefully assess the unique risks associated with your business before choosing a policy.

How long does an employers' liability policy last?

A policy typically lasts for 12 months, and will nearly always come with the option to renew at the end of the term. Your insurer will usually contact you around 30 days prior to the policy expiring to remind you and offer renewal options. This is a good opportunity to review the policy to ensure it’s still fit for purpose; if you’ve hired more staff, or the business has taken on new responsibilities, you may need to update or adjust your coverage.

What if I do not have employers' liability insurance?

If you’re legally required to have employers’ liability insurance but don't secure adequate cover, you could be fined up to £2,500 for each day you operate without it. This applies even if your employees are temporary, part-time, or casual workers. You can also be fined £1,000 if you fail to display your employers’ liability certificate or refuse to make it available to inspectors upon request.

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

Public liability insurance covers claims made by third parties — generally customers or members of the public — for injuries or property damage caused by your business activities. Employers’ liability insurance, on the other hand, covers claims made by employees who are injured or become ill as a consequence of carrying out their work. This type of insurance is very often a legal requirement if you employ staff (though there are some exceptions), and ensures you’ll be protected if an employee files a claim for any workplace-related incident.

Do I have to display my employers' liability insurance certificate?

Yes – you need to display your employers' liability insurance certificate in a prominent place where it can be easily seen. This can be a physical copy displayed at your workplace — staff room, kitchen, reception area — or can be digital, as long as it is readily accessible to employees. A failure to display the certificate or make it available to inspectors upon request could result in a fine of up to £1,000.

Does it cost to claim on employers' liability insurance?

No, you don’t have to pay an excess to claim on your employers' liability insurance. The policy is designed to cover the cost of compensation and legal fees if an employee makes a claim against you, ensuring your business is protected without any additional expenses.

When do I need employers' liability insurance?

You need employers’ liability insurance as soon as you hire employees, even if they’re temporary, part-time, or contractors. The policy must be provided by an authorised insurer. This insurance protects your business by helping to cover compensation costs if an employee is injured or becomes ill as a result of their work.

Do I need employers' liability if my staff are volunteers?

Yes – employers' liability insurance is required if you have paid staff, volunteers, apprentices, or work experience placements. Even if your team members are unpaid, they’re still considered employees under the law, and as a result you and the business have a duty of care to provide a safe working environment.

Does employers' liability insurance cover claims from former employees?

Yes, employers' liability insurance will typically cover a claim made by a former employees, provided the incident in question occurred while they were employed by your business. For example, if a former employee develops a workplace-related illness or injury after leaving your company, they may still be in a position to file a claim. It's important to note that coverage will apply to incidents that occurred during the active policy period, so maintaining continuous coverage is crucial. Additionally, some policies may include specific conditions or timeframes for reporting incidents, so always check your policy details to ensure you're protected over the long term.

Do I need employers' liability insurance for remote workers?

Yes, employers' liability insurance is typically required for remote workers if they are considered employees of your business and are based in the UK. It covers work-related injuries or illnesses, even if the work is done remotely. The requirement remains the same regardless of whether employees work in-office or from home, so long as they are on your payroll. Be sure to check specific local regulations to ensure full compliance.

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What is it?Who needs it?When you don't need it What it covers Times when it's crucial Determining the cost How to choose How much does it cost?How to make a claim Other types of insurance FAQs

What is employers' liability insurance?

Employers' liability insurance is a form of business insurance that protects employers if their employees become ill or injured while carrying out their work. It covers the costs of legal expenses, compensation payments, and other associated costs resulting from claims made by employees. This not only safeguards your business from potentially significant financial losses, but also provides peace of mind.

In the UK, businesses are legally required to have employers' liability insurance under the Employers’ Liability (Compulsory Insurance) Act 1969 and the Employers’ Liability (Compulsory Insurance) Regulations (Northern Ireland) 1999 if they have one or more employees. Despite this, Association of British Insurers research found that, as of January 2026, some 39% of SMEs with 1 to 9 employees didn’t have compulsory employers’ liability insurance, putting them at financial and legal risk.

Business liability claims are costly, with £7.6 million paid out per day to cover compensation and legal expenses. Without adequate cover, a single claim could have a devastating impact on a business’s finances.

Who needs employers' liability insurance?

Employers’ liability insurance is a legal requirement for most businesses in the UK, ensuring protection for anyone working for you. It safeguards your business from claims if an employee is injured or falls ill due to their work.

It's needed if you employ:

Full-time and part-time employees
Self-employed contractors (unless they provide their own tools and work entirely independently)
Temporary staff, apprentices, or volunteers
Anyone on work experience/training schemes

If you’re required to have a policy, it must cover at least £5 million and be provided by an authorised insurer. Not having adequate cover can lead to significant penalties:

£2,500 per day for not having the required insurance
£1,000 if you fail to display your Employers’ Liability Certificate where staff can see it, or if you refuse to show your insurance certificate to an inspector when asked

Business success stories

When you might not need employers' liability insurance

While employers’ liability insurance is a legal requirement for many businesses, there are specific situations where it may not be necessary.

For example, you may not need to purchase it if:

You run a family business and only employ close family members (unless your business is a limited company)
You run a company in England, Scotland or Wales and employ someone who is based outside Great Britain, or you run a company in Northern Ireland and employ staff based outside the UK
Your business is a public organisation, health service body, or another exempt publicly funded organisation
Your business is a limited company with no employees other than yourself, and you also own 50% or more of the share capital

If you’re unsure about your legal obligations, it’s always worth seeking advice before making any decisions and consider the differences between different types of cover like public liability.

What does employers’ liability insurance cover?

Covered

Compensation for injuries and illnesses sustained by employees while working for their employer

Legal fees and expenses incurred by the employer in defending a claim made against them by an employee

Costs of medical treatment for sick or injured employees

Expenses associated with settling a claim made by an employee, including damages and legal fees

Compensation for temporary or permanent loss of earnings for the employee as a result of the injury or illness

Claims involving contractors, apprentices, or work experience placements

Cover for multiple claims arising from the same incident, up to the policy limit

Not covered

Claims made by self-employed individuals who are not legally classified as employees

Claims related to incidents that occurred prior to the policy's start date

Incidents involving employees who were not performing work-related duties at the time

Claims resulting from an employer's intentional or criminal actions, including gross negligence

Fines, penalties, or punitive damages imposed on the employer

Employers' liability insurance: example claim scenarios

Construction site accident

A worker at your construction site falls from some scaffolding, breaking their left leg. They file a claim for medical expenses and lost wages. Employers' liability insurance can help you to cover the compensation costs, including any legal fees.

Office injury

One of your employees trips over a loose cable in the office and badly injures their right ankle. They end up needing treatment and time off work. The insurance can cover medical bills and any compensation for lost earnings.

Retail employee illness

An employee who works in your toy shop starts to suffer from repetitive strain injury due to poor ergonomics while working at the checkout. Employers' liability insurance can cover the costs of treatment and compensation for their time off.

Food allergy

A waiter working at your hotel inadvertently serves a dish with an allergen to a customer who suffers a severe allergic reaction. While public liability insurance would cover customer claims, employers' liability insurance could come into play if the employee’s actions were the result of inadequate or inaccurate training.

Warehouse incident

A delivery driver employed by your logistics company suffers a lower back injury while lifting heavy packages. Employers' liability insurance could help cover medical expenses, rehabilitation costs, and compensation for the employee’s recovery time.

What determines the cost of employers' liability insurance?

The cost of employers’ liability insurance depends on several factors, including the nature of your business, the size of your workforce, and the level of risk involved in your operations.

The main things that will be taken into account are:

Industry: The level of risk associated with your business operations will influence the cost. High-risk industries — construction and manufacturing, for example — will generally face higher premiums owing to the greater likelihood of workplace accidents.
Business size: Larger businesses with more employees will typically pay higher premiums. The more individuals, the higher the potential cost of claims.
Coverage level: The amount of coverage you need will also affect your premium. The legal minimum cover is £5 million, but you might decide to choose higher limits depending on the nature/size of your business.
Claims history: If your business has a history of making claims then insurers could regard your business as riskier than another similar operation. This could lead to higher premiums.
Health and safety record: A strong health and safety record can help lower premiums, as insurers are likely to view your business as having a lower risk of workplace accidents.

Be mindful of the fact that insurers will assess risk factors slightly differently. Comparing quotes from different providers can ensure you’re best placed to find the coverage that works for your business.

How to choose an employers' liability insurance policy

Choosing the right employers’ liability insurance policy is an important business decision. Here’s a step-by-step guide to help you make the right choice.

Determine if you need it

If you have one or more employees, you’ll likely need an employers’ liability policy. It's a legal requirement for most businesses and is designed to cover the cost of compensation if an employee becomes ill or is injured at work, and they decide to claim against your company.

Identify the cover you need

Policies differ in terms of coverage limits, exclusions, and specific protections. When choosing a policy, consider the nature of your business and the types of risks employees might face. Some businesses — those in construction and manufacturing, for example — are likely to require more comprehensive coverage than other sectors.

Compare quotes

Once you’ve determined the coverage you need, it’s always worth comparing quotes from different insurers to find a policy that aligns with your specific requirements. Don’t just focus on price; make sure the coverage offered meets all your needs.

Review the policy documents

Before purchasing your chosen policy it’s important to carefully review the associated policy documents. These will outline the terms of the coverage, what’s included and excluded, the claims process, and various other key pieces of information.

Purchase the policy

Once you've selected the right policy for your business you can easily purchase it online. It’s then a good idea to regularly review your policy to make sure it still fits your business as it grows and changes.

How much does employers’ liability insurance cost?

Employers' liability insurance costs vary based on factors like business size, industry risks, and claims history, with larger businesses typically paying more.

Comparing quotes can help you find the right coverage at the best price.

“Employers' liability insurance protects businesses from the financial impact of workplace accidents or claims, offering peace of mind and ensuring your employees are safeguarded.”

Joe Phelan

SME expert

How to make a claim on your policy

If an employee suffers an injury or bout of illness at work and you need to make a claim on your employers’ liability insurance, these are the steps that you will likely need to take.

Report the incident

As soon as the incident occurs — or as soon as you become aware of it — report it to your insurance provider. This might include filling out an incident report and providing details about the injury or illness, the circumstances, and the immediate actions taken. Keep a thorough record of everything related to the incident, including things such as medical reports and witness statements.

Provide supporting evidence

It’s always beneficial to provide the insurer with as much detail as possible so the claim can be properly assessed. This could include anything from photos of the scene, medical records, witness statements, as well as any internal investigations conducted. The more evidence you’re able to provide, the easier and quicker the claims process is likely to be.

Cooperate with any investigation

Your insurer may carry out its own investigation. If this happens, it’s important to cooperate fully and provide any further information that is requested. It’s important to act quickly and keep your insurer informed throughout the process to ensure any claim is handled efficiently.

Other types of insurance to consider: bundle for comprehensive coverage

When it comes to protecting your business, it’s important to consider more than just employers’ liability insurance.

Public liability insurance: This covers damage caused by your business to a third party or their property. A third party is usually anyone who isn’t employed by your business.
Professional indemnity insurance: This covers claims arising from mistakes, errors, or omissions in the advice or services provided by you or your company. It protects against legal costs and compensation making it suitable for startups.
Goods in transit insurance: This covers loss, damage, or theft of goods belonging to clients or customers while they’re being transported. It provides protection during the journey, whether shipping products or delivering services.
Tool insurance: If your business relies on tools — whether small items like hammers and saws, or larger equipment like diggers — tool insurance can be invaluable. It covers the cost of replacing essential tools and equipment if they’re lost, stolen, or damaged.
Shop insurance: Shop insurance protects your business from risks like damage to property, theft of stock, or customer claims related to items sold. It also covers situations such as shop closure due to flooding.

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About the author

Joe Phelan

Joe joined the money.co.uk team in 2024, where he helps small business owners navigate the often confusing world of business finance. His role is to cut through the jargon and create clear, actionable content that empowers entrepreneurs to make confident financial decisions.

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