Employers’ Liability Insurance

Employers’ Liability Insurance is more than just a legal tick-box; it is the financial backbone that protects your business when your people need it most. If an employee suffers an injury or falls ill because of their work, the compensation costs can be devastating. At Daines Kapp, we help you navigate the complex UK legislation to ensure your workforce—and your bottom line—are fully protected.

Whether you run a small office or a large construction firm, understanding your obligations under the Employers’ Liability (Compulsory Insurance) Act 1969 is vital. We are here to strip away the jargon and provide clear, robust cover that gives you peace of mind.

What is Employers’ Liability Insurance?

Employers’ Liability Insurance covers the cost of compensating employees who are injured or become ill through work-related activities. It pays for legal defense costs and any resulting compensation payouts if your business is found liable.

While safety standards in the UK are high, accidents happen. A slip on a wet floor, a fall from height, or long-term conditions like repetitive strain injury can lead to significant claims. Without this cover, you would have to meet these costs out of your own pocket, which could bankrupt a smaller business.

Furthermore, it is a statutory compulsory cover. Failure to hold valid Employers’ Liability Insurance can result in fines of up to £2,500 for every day you are uninsured.

Who Counts as an “Employee”?

This is the most common area of confusion for our clients. You might think you don’t have “employees” because you don’t have full-time staff on PAYE, but the legal definition is far wider than that.

In the eyes of the insurer and the Health & Safety Executive, you likely need cover for:

• Full-time and part-time staff.
• Labour-only subcontractors: These are workers who work under your supervision, use your tools/materials, and work the hours you set. They are generally treated exactly the same as direct employees for insurance purposes.
• Apprentices and volunteers.
• Work experience students.
• Temporary staff.

If you use Bona-Fide Subcontractors (independent firms who use their own tools, set their own hours, and hold their own insurance), you generally do not need to cover them under your Employers’ Liability policy. However, you must have a system to check they have their own valid Public and Employers’ Liability policies in force. If their insurance fails, the claim could come back to you.

How Much Cover Do I Need?

The law demands a minimum limit of indemnity of £5 million. However, you will find that most standard UK insurers, including the ones we work with, provide £10 million as standard.

Legal Exemptions

While most businesses must have this cover, there are specific exemptions. You may not be legally obliged to hold Employers’ Liability Insurance if:

• Family Businesses: You are a family business not incorporated as a limited company, and all employees are closely related (e.g., spouse, parents, siblings, children).
• Sole Employee-Owners: You are a Limited Company with only one employee, that being the owner, who also owns 50% or more of the issued share capital.
• Public Bodies: Certain government and health bodies (e.g., NHS trusts) are exempt.

For full details, we would recommend a review of the Heath & Safety Executive’s “brief guide for employers” .

The Daines Kapp Approach to Risk

We do not just sell you a policy and walk away. As your trusted advisor, we help you present your risk to insurers in the best light. For high-risk trades like arboriculture, construction, or manufacturing, demonstrating that you have robust Health & Safety policies can significantly influence your premium.

We can assist you in ensuring you have access to the right resources, such as those from the Health & Safety Executive (HSE), to keep your workforce safe. After all, the best insurance claim is the one that never happens.

Frequently Asked Questions

Does Employers’ Liability cover staff working from home?

Yes. Your duty of care as an employer extends to any location where your staff are working, including their own homes. If an employee develops back problems from a poor workstation setup or trips over a trailing cable while working, you could still be held liable.

I only employ casual workers; do I still need insurance?

Yes. Casual workers are entitled to the same protection as permanent staff. If you pay them, supervise them, and control their work, you almost certainly need Employers’ Liability Insurance.

Do I need to display my certificate?

Yes. You must display a current copy of your certificate of insurance where employees can easily read it. Since 2008, businesses have been allowed to display this electronically (e.g., on an intranet), provided all staff have access to it.

What about claims from former employees?

Some industrial diseases (like asbestosis or noise-induced hearing loss) take decades to manifest. Your insurer at the time the exposure occurred is responsible for the claim, even if the employee left years ago. This is why it is crucial to keep records of your past insurance certificates for at least 40 years.

Ready to Protect Your Team?

Don’t leave your business exposed to heavy fines or compensation claims. Whether you are a sole trader taking on your first apprentice or a large firm managing complex subcontractor chains, the Daines Kapp team is here to help.

Call us today to discuss your Employers’ Liability Insurance needs, or explore our Public Liability Insurance options for complete protection.

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