Employers liability insurance is a type of coverage that protects employers from financial losses if an employee becomes ill or injured as a result of their work.
If you're running a limited company with employees or multiple directors in the UK, employers' liability insurance isn't just advisable—it's the law. The law requires businesses to have a minimum coverage of £5 million, though there are a few exceptions as detailed below.
However, if you are the only shareholder and director of your company and do not employ anyone else, you are not legally required to have employer’s liability insurance.
Employers' liability insurance is compulsory if you have employees or multiple directors, whether they are full-time, part-time, temporary, contractors, or apprentices.
Operating without this insurance can lead to a fine of up to £2,500 for each day you are uninsured. Moreover, failing to display or produce your employers' liability certificate if requested by the Health and Safety Executive (HSE) could result in a further £1,000 fine.
Sole shareholders & directors: If you're the sole shareholder and sole director of your company and you don't employ others you do not legally need employer’s liability insurance.
Sole Traders: If you are a sole trader, and you employ immediate family members, you generally do not need employers' liability insurance. However, this exemption does not apply if your business is a limited company, in which case insurance is necessary even for family employees. Immediate family members include your spouse, children, grandchildren and grandparents.
Subcontractors: You don't need this insurance for bona-fide subcontractors who work independently and use their own tools. However, for labour-only subcontractors who work under your supervision and use your equipment, you will need it.
Employers' liability insurance is a crucial component of running a lawful business in the UK. If you're uncertain about your specific requirements, it's best to consult with an insurance professional or seek legal advice to ensure you're fully protected and compliant with the law.
.svg){kind=icon}
