Your guide to employers’ liability insurance

  • 27 Nov 2020

By Janthana Kaenprakhamroy, CEO of Tapoly

As an employer, you are legally obligated to provide a safe working environment for all employees. An important part of this is a legal requirement to hold employers’ liability insurance to protect both your employees and your business in the event of injury that may occur while people are working for you or on your premises. However, this critical cover remains neglected by some businesses.

What is employers’ liability insurance?

In short, employers’ liability insurance protects your business should an employee file a claim against you in the event of workplace injury. This has been a legal requirement since The Employer’s Liability Act 1969.


Despite this legal obligation, some businesses may not know that they should have this insurance in place and others choose not to take it out, instead taking a chance on the fact that large disputes of this nature are quite rare. While this may be the case, failing to be adequately insured is not only breaking the law, it also means you are not upholding your duty of care as an employer.

Any business that employs staff should have employers’ liability insurance to protect themselves and their employees. No matter the size of your business or how many people you employ, you need to hold at least the minimum amount of cover to avoid getting in hot water. You may think that because you do not work in a traditionally risky or dangerous industry that you do not require cover, however employees working in offices do still remain vulnerable. For example, they could hit their head, slip and fall, or develop RSI.

If you are a contractor or freelancer and you employ other people or your team works remotely, you are still required to hold at least the minimum cover of employers’ liability insurance.

How much cover do I need?

The Employers’ Liability Act 1969 specifies that employers need to have at least £5 million worth of cover, however larger businesses often opt to increase their levels of cover to £10 million or more as a precaution. The amount of cover required is dependent on the number of employees you have on payroll. If your business does not have at least this amount of cover, you are both breaking the law and skipping your responsibility, which could prove fatal for the future of your company.


What could happen if I don’t have it?

If you don’t have employers’ liability insurance, you are leaving both your employees and your business at risk. If you are found to be breaking UK business laws like these you can be fined up to £2,500 every day that you are found not to be covered, and fines could reach a considerable £25,000. The costs of these fines are likely to far outweigh your insurance costs, so it makes financial sense to have insurance policies in place.

If an employee makes a claim, takes you to a tribunal and you do not have adequate cover, the chances that they will win are very high. On top of paying your legal defence costs, there are likely to be additional considerable financial and reputational repercussions which could be enough to close your business. Damages have been known to be in the excess of millions depending on the extent of the injury. In addition, there is a possibility of jail time if the injuries incurred severely impact their quality of life.

Does employers’ liability cover everything?

Whilst this will cover many parts of the tribunal and help you pay compensation costs, it does not cover the legal expenses involved in the case. Therefore, you may find it useful to add-on legal expenses cover.


As an employer you may feel like it is enough to have physical precautions in place to prevent employees from injuring themselves at work, however employers’ liability insurance cover is an equally essential legal requirement that simply cannot be ignored. Having the safeguards in place to take care of yourself, your business and employees is critical to your role as a responsible and legally compliant business owner.

FSB members can get free telephone advice about business insurance and employers liability from our dedicated FSB Insurance Service, visit to find out more.


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