Employers’ liability insurance
Employers’ liability insurance is legally required for most UK employers. What it covers, the £5 million minimum, and the penalties for not having it.
Employers’ liability is the one business insurance that is required by law. Under the Employers’ Liability (Compulsory Insurance) Act 1969, most businesses must hold it from the moment they employ anyone, with a minimum limit of £5 million. It covers claims from employees who are injured or become ill because of their work.
Key takeaways
- Required by law for most employers, with a £5 million statutory minimum.
- Applies to part-time, casual, temporary and often family staff — not just full-time employees.
- HSE can fine businesses for each day they trade without it.
- Most insurers issue £10 million as standard, because £5m is a floor rather than a target.
Who counts as an employee
Broadly, anyone you direct and control counts, which is wider than a payroll list. Part-time staff, casual and seasonal workers, apprentices, students on placement and temporary staff generally all fall inside. Genuinely self-employed contractors normally do not, but the test is the working relationship rather than the label on the invoice — and getting that wrong is a common and costly error in trades that use subcontractors.
Family employees are not automatically exempt
There is a limited exemption for some family businesses, but it is narrower than most owners assume and it does not apply to incorporated companies in the way people often think. If you employ relatives through a limited company, take advice rather than assuming you are exempt.
What happens if you do not have it
- The Health and Safety Executive can fine a business for each day it trades uninsured.
- There are further penalties for failing to display or produce the certificate when asked.
- Any successful employee claim comes out of the business’s own money, with no cover behind it.
- Directors can face personal consequences where the failure was deliberate.
What drives the price
Employers’ liability is priced primarily on your wage roll and the hazard of the work. An office of ten people is a very different risk from a kitchen brigade or a roofing crew, and premiums reflect that gap starkly. Claims history matters, and so does documented health and safety — risk assessments, training records and accident books are things insurers ask about and price on.
Employers’ liability insurance: frequently asked questions
Do I need employers’ liability if I only have one part-time member of staff?+
Almost certainly yes. The requirement is triggered by employing anyone, not by employing a certain number or a certain contract type. Part-time, casual and temporary staff all normally count. The £5 million minimum applies regardless of how few people you employ.
Do I need it if I am the only director and have no staff?+
Usually not — a company with a single director who is also the only employee is generally exempt. But the moment you take on anyone else, including casually, the requirement applies. If you are unsure whether someone counts, treat them as an employee until you have taken advice.
Is £5 million enough?+
It is the legal minimum, and most insurers issue £10 million as standard because the difference in premium is small relative to the extra protection. Serious industrial injury claims can be very large, particularly where long-term care is involved, so the higher limit is normal rather than cautious.
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How this page is produced
Written by My Energy Deals Ltd and reviewed by Arkwright Insurance Brokers Limited (FCA firm reference 434855).
mybusinessdeals is an introducer, not an insurer and not an FCA-authorised broker. This page is general information about types of cover, not a personal recommendation or advice on which policy to buy. Any policy is arranged by, and you contract directly with, our FCA-authorised partner or their panel. Premium figures are indicative market ranges, never a quote.
Last reviewed 3 September 2026.
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