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Last updated: 5 April 2024
What is employers' liability insurance and what does it mean for you?
Employers' liability insurance can cover claims from employees for work-related injuries or illness. This articles explains what it is, how it works, and the fines a trade business could face for getting it wrong.
Any trade business with employees in the UK will probably be required to have employers' liability insurance (ELI). It’s a type of insurance that can pay legal costs and compensation relating to claims from employees who are injured as a result of working for your company.
A work-related accident or injury could happen at any time. Having the right insurance gives trade business owners - and employees - some peace of mind if the worst happens.
The importance of preventing workplace accidents
The Health and Safety Executive (HSE) estimates that between 2018/19 and 2021/22 an average of 612,000 workers every year were injured in workplace accidents.
Under compulsory insurance regulations, there's a legal requirement for employers to have this type of cover.
As this type of insurance relates to accidents and injuries there are preventative steps you can take, in addition to getting the right cover. These can reduce the likelihood of claims against our business.
Improving safety at work
Here are some steps a trade business can take to reduce the risk of workplace accidents:
Keeping workplaces and sites safe
Protecting people working at height
Working safely with machinery tools and equipment
What Employer Liability Insurance covers
Employers' liability insurance provides cover for claims from employees for work-related incidents, such as against a trade business that will usually be covered by ELI must be related to work:
Accidents
Injuries
Death
Long-term injuries, such as hearing loss
Former employees making claims
Common causes of workplace injuries and accidents
While no trade business wants accidents to happen, they can occur. Even when you take safety measures and make sure employees are properly trained.
Some of the risks in the workplace include:
Slips and trips
Using machinery
Contact with dangerous materials such as toxic substances
Failing to give proper health and safety training on using equipment, plant, machinery and tools
Falling from height – working on a roof or on scaffolding that collapses
Is Employers’ Liability Insurance a legal requirement?
For business with employees in the UK, employers’ liability insurance is usually a legal requirement.
You could be fined if you are required to have employers’ liability insurance and don’t have the correct cover in place, or can’t provide evidence of your cover when prompted by the HSE.
What will a policy pay for?
Typically, an insurance policy will cover legal and compensation costs relating to an injury or accident:
Lost income
Hospital and medical bills
Legal costs
Claims for damages
Who is employers' liability insurance for?
HSE has useful information on what workers you would normally need to cover with your insurance policy.
You probably need employers' liability insurance to cover:
Permanent staff (where you deduct PAYE and National Insurance from their wages or salary)
Where you control where, when and how they work
Where you provide them with work equipment and materials
Where they do the same work under the same conditions as other employees
As well as permanent staff, you might need to invest in ELI for:
Casual workers
Seasonal workers
Temporary staff
Apprentices
Students
People on work placements and work experience
Protect yourself and your employees
Save on insurance with a Checkatrade membership
When you might not need employers’ liability insurance
Not all people working for a trade business need to be covered by ELI. Here are some situations where insurance might not be required:
Contractors - if they work for other businesses they may already have their own employer liability insurance
Members of your family who work for your business
If you have no employees (you are probably self-employed and a sole trader)
If an employee works abroad for your business
What determines the level of cover you need?
An insurance provider will want to know details about your business. These include:
Your trade
How much your business makes in turnover
Which risks you want to buy cover for
How many employees you need cover for
What happens if you need cover and don’t have it?
There are fines for not having cover if your business should have it.
You can be fined £2,500 for every day you are not properly insured
You can also be fined £1,000 if you don’t display your insurance certificate or don’t let a government inspector view it on request
Dealing with old claims
Be aware that former employees can bring claims against a business. These could be for injuries or accidents they suffered in the past.
Protect yourself and your employees
Save on insurance with a Checkatrade membership
Getting an employers' liability insurance quote
HSE recommends that businesses should obtain employers’ liability insurance from an authorised insurer.
Useful places where you can find, research and buy insurance for your trade business include:
Going direct to an insurer
Working with an intermediary such as an insurance broker
Finding recommended providers through trade associations
Cost of employers’ liability insurance
This will depend on a number of factors, including:
The nature of the work your trade business does
How many employees you want to be covered by the policy
How much cover you choose to purchase
What is the importance of an employers’ liability insurance certificate?
An important thing to remember when you have ELI is the certificate.
This must be displayed where it can be seen at your premises. As we’ve said, you can be fined for failing to do this.
FAQs
Does my trade business need Employers’ Liability insurance?
If you have employees, then you probably do. If you are meant to have the insurance then you can be fined £2,500 for every day that you don’t have it.
What does Employer Liability Insurance cover?
Employers’ Liability Insurance pays compensation and other costs for claims for workplace accidents and injuries suffered by employees.
How much does Employer Liability Insurance cost?
This will depend on various factors, including the type of work you do , how many employees you have and whether you have made previous claims.
What is an Employer Liability Insurance certificate?
This is an important piece of paperwork that you must put on public display. You can be fined £1,000 if you don’t.
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Content disclaimer: This content has been created for general information purposes and should not be taken as formal advice. Read our full disclaimer here.
