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Understanding Employer’s Liability Insurance
Posted by David Cant on October 3, 2013
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health and safety at workDoes your business have Employer’s Liability Insurance? Do you know whether or not your business requires it, what it covers, and what it doesn’t? Today we’re taking a look at this mandatory insurance, and understanding some of the issues relating to it.

The Employer’s Liability (Compulsory Insurance) Act 1969 was brought in to help protect workers in the event of an accident at work, allowing them to claim compensation for injuries, medical expenses and other costs arising from the incident.

Unfortunately not every business takes out this insurance, even though it is compulsory. Only fairly recently a pub was found to have several members of staff on its book, but no liability insurance. The HSE discovered this but the owners continued to refuse to take out the insurance policy, resulting in them being taken to court and fined nearly £4,000.

This was in fact a fairly lenient sentence, since in theory at least a business can be fined £2,500 per day that they are without the correct liability insurance.

Which Type Of Business Need Liability Insurance, And Which Don’t?

Generally speaking there’s an easy rule to remember when it comes to determining whether or not a business needs liability insurance. The rule is this: yes.

Any business, whether it’s run by an individual, incorporated bodies, limited companies or companies run by limited liability partnerships all need liability insurance. If the business has even one employee, then that employee must be protected through a business’s liability insurance.

Be aware that there is a popular misconception running throughout the health and safety business which I have come across a number of times over the years. Many people still believe that if a limited or incorporated company only has directors, and doesn’t have any employees, then there is no legal requirement for liability insurance. This is wrong.

The reason this belief is wrong is that legally an incorporated or limited company is considered separate from the directors, and therefore technically the directors are still classified as employees. This therefore means that liability insurance is still a necessity, and the company can be fined substantially for failing to have appropriate cover.

What Type Of Liability Insurance Is Acceptable?

There are two basic requirements as far as Employer’s Liability Insurance is concerned. These are:

  • the insurance policy must be taken out using an authorised insurer
  • the sum for which the business is insured must be at least £5 million

In practice most insurance policies will cover a company for at least £10 million as standard, but certainly taking a policy out for less than £5 million, or taking it out through an unauthorised insurance broker or company could well result in legal action being taken against the company.

More Information

If you require further information, clarification or advice regarding Employer’s Liability Insurance then you can obtain this in two ways. You can either download the ‘Brief Guide for Employers’ published by the HSE here:

Alternatively you can telephone Veritas Consulting free on 0800 1488 677 where you can discuss your concerns or raise any questions you may have with highly knowledgeable and experienced health and safety professionals.


David Cant is a Chartered Safety and Health Practitioner extraordinaire. He has a wealth of Industry experience and is the MD of Veritas Consulting. David also Blogs about Health and Safety here Health and Safety Consultants

His aim is to flavour Health and Safety with integrity, served with a side of humour You can find David on - Twitter and Google also Linkedin

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