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What’s employer’s liability and do I need it?

Employer’s liability insurance covers the legal costs and the cost of compensation if you are held liable for an injury or illness to an employee of your business. It must be as a result of the work they undertake for your business. If your business has any employees you are required to hold an employer’s liability insurance policy by law.

The minimum requirement is a £5 million limit of indemnity however most insurers offer £10 million as standard.

There are certain circumstances where you aren’t legally required to hold employers liability, including:

  • Family businesses, i.e. if all your employees are closely related to you. But importantly this does not apply to family businesses which are incorporated as limited companies
  • Businesses employing only their owner where that employee also own 50% or more of the issued share capital in the company (Health and Safety Executive, HSE40rev4)

Comprehensive advice can be found on the Health and Safety Executive website.

The law also requires you to make your employers liability insurance certificate visible at your place of work. An employer’s liability insurance certificate will always be provided by insurers when you take out an insurance policy.