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What is Employers Liability Insurance?

Employers Liability (EL) Insurance is one of the main insurances required by contractors. The policy provides cover for legal representation and compensation arising from claims made against your company in respect of bodily injury or damage to property suffered by employees.

End clients and recruitment agencies will usually specify that you have Employers Liability insurance, often with a minimum level of cover of £10m in place before letting you commence the engagement. EL can only be bought as an extension to a Public Liability Insurance policy, and furthermore it is the only business insurance you’re legally obliged to have should you employ anyone through your limited company other than yourself. 

It’s a common misconception that the insurance of the end client and/or recruitment agency extends to cover the contractors on their books, however, in almost all cases it doesn’t. This leaves the contractor open to claims and enormously exposed, which is why having EL insurance is essential.  

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Why choose a Roots Employers Liability policy?

Our Employers Liability (EL) product is one of the best on the market for the trades we cover and the price we charge. Premiums start at just £50.00 (inclusive of Insurance Premium Tax) for Employers Liability as an add-on to a Public Liability Insurance policy. In addition, the excess payable in the event of a claim can be reduced from £500 to £0 for just a small additional cost. Our policies are underwritten by some of the largest insurers in the world and have claims handled by top UK legal firms, meaning that our Employers Liability offering is as good as they come.

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EL Policy Benefits

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Quote & Buy in Minutes

Our website is based on the latest technology, combined with insurer flexibility. This allows you to get a firm quote in under a minute, and be able to progress and buy and receive your policy documents in just a couple of minutes more, all available on 24/7/365 self-service basis.

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Expert Advice

We’ve been involved in the contractor insurance marketplace for over a decade, working at senior manager and board level at some of the most well known companies. Our highly experienced staff have personally reviewed thousands of contracts from an IR35 status perspective.

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Tailored for Contractors

All of our insurances and IR35 status reviews are designed to the exact needs of contractors, they’re not generic off-the-shelf policies. We back it up with highly experienced staff who are able to answer any queries may have, all from our Loughborough office in the heart of the Midlands.

EL Insurance Policy Features

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Defence Costs

Cover for the legal costs and expenses incurred in relation to the investigation and defence of a claim, including any appeal issued in connection with it. Compensation is covered separately, giving you double the coverage.

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Compensation

Cover for damages and awards which your business is legally liable to pay as compensation arising from any accidental bodily injury and/or property damage that emanates from your business providing its professional services.

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Reimbursement for Court Attendance

If you have to attend Court (in relation to an accepted EL claim under this policy) as a witness you will receive £250 compensation per day for each day on which your attendance is required.

Frequently Asked Employers Liability Insurance Questions

 

What is employers liability insurance? 

Employers liability insurance provides protection against the contracted employees of a company i.e. full time, part-time, contract, temporary, casual and seasonal staff, who make claims that allege personal injury or illness through work. This potential risk makes it integral for those contractors who have more than just themselves working for the company to hold employers liability insurance.   

Who needs employers liability insurance? 

Employers liability is a requirement for any company that has any employees be they permanent, part-time or temporary workers as you have a responsibility for their health and safety as their employer.  If you a Limited Company and you are the single employee and own at least 50% of the issued share capital of the company then you are exempt from having to hold employers liability, meaning that if you are the stereotypical one-man-band business that employees only you, this insurance is not required.  

It is not uncommon for end clients and agencies to insist that a contractor holds employers liability insurance, as an extension to a public liability insurance policy, before they are allowed to commence on a contract. 

What is the minimum limit of indemnity required for employers liability insurance? 

Where it is required, the legal obligation is to have a minimum limit of indemnity of £5,000,000, but most providers offer £10,000,000 as standard.

Can I buy employers liability insurance on its own? 

No. Employers liability will not be sold on its own, it will usually be offered as an optional add-on to a public liability insurance policy.

How does employers liability insurance assist my business? 

Employers liability covers your business for any claims made against you by employees or sub-contractors, typically for personal injury, serious illness or accidental death sustained as a result of their employment with you, reacting to cover the legal costs in defending the claim as well as paying the damages for which you are found liable. However – it is key to note that if your insurer believes that you have failed to meet the health and safety legal responsibilities for your employees that lead to a claim being made, they may sue you to recover the cost of the compensation. 

How does holding employers liability insurance help me with my IR35 position? 

From an IR35 perspective, a business strengthens its IR35 status by holding employers liability as it shows the company to be in business on its own account – unlike an employee who would be covered under its employers ’employers liability’ policy. A vast number of contractors feel it is prudent to have this insurance in place even if the end client or agency do not request it. 

Do I need employers liability? 

In England, Scotland and Wales, The Employers’ Liability (Compulsory Insurance) Act 1969 makes it a legislative requirement for a business that employees anyone to have a minimum level of £5,000,000 cover in place. The 2004 amendment to this act provided the exemption for what is in effect one-man-band Limited Company’s not to have to hold Employers Liability. 

You only need employers liability insurance if your employees are normally based in England, Scotland or Wales, including offshore installations and association structures.  If all your employees work abroad you do not, therefore, need the insurance under UK law, however, you will need to check the relevant legislation for the country that they are based to ensure they are protected as required.  If you have employees who are normally based abroad but are in England, Scotland or Wales for more than 14 continuous days (or more than 7 continuous days if on an offshore installation) you will need Employers Liability for them. 

A business is required by law to display a copy of their employers’ liability certificate so that employees can easily read it, which since the 1st October 2008 can be electronically as long as employees are informed how and where to find the certificate.  Also since the 1st October 2008 there is no longer a legal requirement for employers to keep copies of out of date certificates, although it is prudent to continue to do so given that some illnesses occur decades after exposure and some employees will make a claim against the employer at the time they were exposed to the cause of the illness. 

If you are required by law to hold employers liability and do not, if caught by the Health & Safety Executive (HSE) you can be fined up to £2,500 for each day you are without the required insurance, whereas not displaying or providing the HSE inspector with, or clear and easy access to, your employers liability certificate can result in fines of up to £1,000. 

Further information, including the text of the Act and the regulations, can be found online at http://www.legislation.gov.uk./  

For those based in Northern Ireland, The Health and Safety Executive for Northern Ireland (HSENI) enforces the law on employers liability insurance. HSENI inspectors can check that you have employer’s liability insurance in place for at least £5,000,000 – as per The Employer’s Liability (Defective Equipment and Compulsory Insurance) (Northern Ireland) Order 1972. However, it is best practice to carefully consider the risks and liabilities you face and if insurance cover of more than £5,000,000 (we offer £10,000,000 as standard) would be appropriate. 

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