Employers' liability insurance

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    Chris Godfrey

    Page written by Chris Godfrey. Last reviewed on May 26, 2024. Next review due April 6, 2025.

    It only takes a moment’s oversight, or minor machine malfunction for accidents to occur at work. Unfortunately, the financial cost of these incidents can be anything but small. Employee compensation claims for work-related illnesses or injuries can often run into the tens or hundreds of thousands of pounds. Few UK SMEs could afford such a blow – which is why they are required by law to have employers’ liability insurance – a safety net that protects both workers and businesses should the worst things ever happen. 

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      What is employers' liability insurance?

      Employer’s liability (EL) insurance is a type of business insurance that protects you and your employees, (including those who no longer work for you), should they be injured or become unwell as a result of working for your business. EL typically covers the associated legal and compensation costs, and other damages of such events, but it can also cover accidental injury or damages caused by an employee to a third party, like your customers.

      Read more: find out what employers’ liability insurance actually is.

      What is the difference between public and employers' liability insurance?

      Public liability insurance protects your business against third party claims for injuries or property damage from a customer or client, a passer-by, or a visitor to your business premises. Employer’s liability insurance covers your employees should they be injured or fall sick as a result of working for your business. 

      Examples of public liability and employers’ liability insurance claims:

      Public liability insurance: A passer-by trips over building materials you have accidentally left on the public footpath. They claim for the costs of recovery and loss of earnings due to their injuries.

      Employers’ liability insurance: An employee catches their hand in a machine tool in your factory. They claim for personal injury, loss of income, and long-term disability.

      Do I need employers' liability insurance?

      If your business employs workers other than yourself, then yes, you do. Under the Employers Liability Act of 1969, Employers’ liability insurance is a mandatory legal requirement for most UK employers. Your policy must cover you for at least £5 million and come from an authorised insurer. Your business can be fined up to £2,500 for every day you are not properly insured. You can also be fined £1,000 if you do not display your EL certificate or refuse to make it available to inspectors when they ask.

      What does employers' liability cover?

      Employers’ liability insurance can pay the compensation amount and legal costs if an employee, or an ex-employee, claims compensation for a work-related illness or injury.

      Who does employers' liability cover?

      Employer’s liability insurance covers full-time and part-time employees, any self-employed contractors you hire, temporary staff, interns, apprentices, volunteers, and people taking part in work experience or training schemes. It can also cover your employees if they are working for you remotely or working from their home.

      When should I get commercial property insurance?

      You should obtain commercial property insurance as soon as you exchange purchase contracts on the property. Unseen events that damage or destroy the property can occur at any time, so it is recommended that you get cover immediately and do not wait until you physically occupy the building or start trading from the premises.

      Top tip: If you do not intend to occupy the building within 30 days of taking out your insurance, you must tell your insurer.

      Who is usually exempt from employers' liability insurance?

      You may not need employer’s liability insurance if you only employ your spouse, family members, or someone who is based abroad (not a resident of Great Britain). 

      What other types of business insurance do I need?

      Accidents, errors and omissions can happen at any time and their impact could bring crippling costs to your business, or even cause you to cease trading. To eliminate this kind of worry, businesses will typically take out a range of insurance protections, including:

      Public liability insurance

      Public liability insurance protects your business if someone is injured, or their property is damaged because of the services that you or your business provides. This type of cover, also known as PL or Liability Insurance, is designed to protect your business against third party claims for injuries or property damage from a customer or client, passer-by, or a visitor to your business premises – whether you’re at fault or not.

      Professional indemnity insurance

      Professional indemnity insurance, also known as Professional Liability Insurance, is an essential type of cover for individuals and businesses that advise clients, help them navigate complex financial or legal affairs, or provide them with vital information that is published in the media. In these kind of cases, errors can cost thousands or even millions in legal compensation claims. Professional Indemnity (PI) can protect you if a client makes a financial loss because of your work and then makes claim against you or your business. Trade associations, government bodies, public institutions, and major customers will often require proof of a minimum level of PI insurance before doing business with you.

      Contents cover

      Business contents insurance covers the insured for the loss, damage, and theft of the contents of their business premises, including stock and inventory.

      Top tip: If you’re a landlord, contents cover will be your tenant’s responsibility. However, depending on the lease/rent agreement you may have supplied furniture or appliances that belong to you. In which case, landlord’s commercial insurance can be used to protect your provided contents from loss, damage or theft caused by the tenant or a third party.

      How much does employers' liability insurance cost?

      Premiums for some employers’ liability insurances can start at less than £5 per month, but just as no two UK businesses are alike, so no two business insurance needs are the same. Costs will depend on your business type and the risks attached to what you do or sell. 

      Read more about the costs of EL insurance here.

      How Swoop can help

      All business involves risk, but that doesn’t mean you have to suffer the consequences if things go wrong. Don’t let an accident or oversight become a catastrophe for your business. Contact Swoop today to compare top-quality employers’ liability cover from different providers and to discuss all your business insurance needs. 

      Written by

      Chris Godfrey

      Chris is a freelance copywriter and content creator. He has been active in the marketing, advertising, and publishing industries for more than twenty-five years. Writing for Barclays Bank, Metro Bank, Wells Fargo, ABN Amro, Quidco, Legal and General, Inshur Zego, AIG, Met Life, State Farm, Direct Line, insurers and pension funds, his words have appeared online and in print to inform, entertain and explain the complex world of consumer and business finance and insurance.

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