If your employee is injured at work or becomes ill because of the work they do for you, employers liability insurance covers the cost of compensation to a claimant and legal fees. Employees injured due to your negligence can seek compensation even if your business goes into liquidation or receivership. 

By law, your insurance must cover at least £5 million but, in practice, most policies offer at least £10 million. 

Some businesses are not required to have employers’ liability insurance, including companies with no employees and family businesses that employ only family members. 

Employers’ liability insurance usually cover claims brought by all permanent employees, contract, casual and seasonal employees and labour-only subcontractors. 

An employee is someone: who has National Insurance contributions and income tax deducted from their salary; whose location, hours and conditions of their work are controlled by their employer; who cannot be replaced by their employer if they are unable to work 

Employers’ liability should also cover claims brought by temporary staff, including students and people on work placements and volunteers, advisers, referees and marshals. 

You should check with your insurer to make sure your employers’ liability policy covers everyone who works with your business. 

You can buy employers’ liability insurance directly from an insurer or from a specialist broker through the British Insurance Brokers’ Association (BIBA). You are obliged to have cover for compensation of at least £5 million, but most policies offer cover for at least £10 million. 

The cost of your premium is based on a number of factors including: 

• The nature of your business 

• The number of people you employ  

• Your previous insurance claims history    

Further information on Employers' liability insurance is available from the Health & Safety Executive