If you employ any staff in your business, employers’ liability insurance is a legal requirement in the UK. But how much cover do you actually need? Getting this right is important – too little could leave you seriously out of pocket if there’s an accident at work.
At Tradesman Saver, we understand that working out your employers’ liability insurance needs can be confusing. Here, our experienced team breaks down how much employer’s liability insurance you need to protect yourself, your business and, just as importantly, your employees.
What is Employers’ Liability Insurance?
A quick refresher – employers’ liability insurance protects your business against compensation claims from employees who suffer illness or injury because of the work they do for you. This includes temporary, part-time and contracted staff.
Any business that employs staff is legally obligated to have a minimum level of employers’ liability insurance in place. Failure to comply means you could be subject to punishment from the Health and Safety Executive – and unlimited fines!
How Much Employer’s Liability Cover Is Legally Required?
By law, if you employ any workers, you must have at least £5 million employers’ liability insurance. This is the minimum legal requirement set by the Employers’ Liability (Compulsory Insurance) Act 1969 for businesses of any size or risk level.
Technically you can get as little as £5 million cover – but those in higher risk roles probably won’t be happy with that amount. Claims from injuries like amputations or fatalities can easily run above £5 million, leaving you with expensive bills to settle personally.
Essentially, £5 million is the absolute baseline if you want to avoid fines or prosecution from the HSE. Having this amount means you meet the legal minimum but won’t necessarily protect your company financially in the event of a large work injury claim.
How Much Employers’ Liability Insurance Do I Really Need?
While £5 million is the minimum legal requirement, most small businesses choose between £10 million and £25 million. This provides better financial protection in the event of serious workplace illnesses, injuries or deaths resulting in high value claims from one or more employees.
Here are some practical guidelines on adequate levels based on company size and workforce risk:
Low Risk, Office-Based Businesses
1-5 staff: £10 million coverUp to 15 staff: £10 millionOver 15 staff: £15-25 million
Medium Risk Businesses (e.g. Retail, Warehousing)
Under 10 staff: £10 million10 to 30 staff: £15 millionOver 30 staff: £25 million
Higher Risk Businesses (e.g. Construction, Manufacturing)
Up to 25 staff: £15 millionOver 25 staff: £25 million
So for a medium-sized construction firm with 15 employees, £15 million employers’ liability insurance would provide better protection compared to the £5 million legal minimum.
The right amount for your business depends on your specific situation and risk profile. If you’re unsure, contact our team for personalised advice.
Why You Should Get More Than The Legal Minimum
Here are some compelling reasons to seriously consider exceeding the £5 million legal minimum, especially in higher risk industries:
It covers your assets – Claims regularly exceed £5 million for serious illnesses like asbestos exposure or life-changing injuries. Without enough cover, your business assets and personal finances could be pursued. Attract top talent – Executives and those in dangerous roles will want assurance that claims payouts won’t be capped or limited by insurance if they suffer injury or illness through work. Reassure stakeholders – Customers, shareholders and regulators will view higher employers liability cover as a sign you take staff welfare seriously. Protect your livelihood – Defending claims personally if your insurance runs out can ruin your finances. Going over the legal minimum reduces this risk substantially.
For complete peace of mind, many businesses choose to take out additional key person insurance or income protection too. This provides extra reassurance even for serious incidents.
Employers’ Liability from Tradesman Saver
Here at Tradesman Saver, we make it quick and easy for small businesses to get employers’ liability insurance along with public liability and other covers from just £59 a year.
Our intuitive online quote builder allows you to get covered in minutes. Alternatively, our advisors are on hand via phone, email or live chat to answer any questions and tailor policies to your business requirements.
For more information, don’t hesitate to get in touch with our experienced, supportive team today.