Once you stop being a sole trader and you have people working for you – even if it’s just one – you‘re legally required to have employers’ liability insurance. It covers you against an employee making a claim for injury or illness as a result of you being negligent as an employer. And once your policy’s in place, you need to ensure that you keep up to date with health and safety at work regulations so that your cover stays valid.
What is employers’ liability insurance?
This mandatory employers’ insurance was put in place in 1969 to protect employees that might become injured at work. It also applies to past employees that become ill due to something they did in the workplace, as long as they can prove it was as a direct result of the actions of their employer.
Do all businesses need it?
The majority do but, there are some exceptions such as if you’re a sole trader. With employers’ liability cover, you’re not covered for claims from your spouse (if they’re employed by your company) or your business partner.
You're likely to need employers’ liability insurance if:
1) you deduct national insurance and income tax from employees’ salaries
2) you pay them hourly, daily, weekly, or even monthly
3) you supply the equipment and materials
Something to note is that your insurance policy should also include temporary staff, student placements, volunteers, advisors, referees and marshals. For a more detailed guide check out the Health & Safety Executive (HSE) website www.hse.gov.uk. If you’re not sure about anything, seek advice as there can be serious implications if you get it wrong.
How much cover is required?
The market rate is £10 million, but you shouldn't assume that’s enough. Look at the type of trade you are in and assess the risk. If it's a bit hazardous then it may be best to increase the cover. It will be more expensive, but it's best to make sure you'll be covered adequately.
Don't get fined!
Choosing to not take out the insurance could cost you dearly. Penalties are shown on the HSE website. You can also be fined for not displaying your Employers’ Liability Certificate of Insurance where your employees can see it, or for not making it available if a HSE inspector asks to see it.
Sounds scary, but it’s easy to fix and we can help you compare employers’ insurance. Create an account, tell us a bit about you and your company and we'll get back to you straight away with a list of competitive insurance quotes for employers. Once you've found the one that best suits your company, you can apply directly from our website.