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Employers' liability insurance is a legal requirement for most businesses
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Employers’ liability insurance is a type of business insurance that covers you against claims for compensation by your employees if they’re injured or become ill through work.
According to the Employers’ Liability (Compulsory Insurance) Act 1969, if you employ one or more people, it’s a legal requirement to have employers’ liability insurance.
If your business employs staff, employers' liability insurance is usually a legal requirement.
Workers who operate under your direction may be considered employees for insurance purposes.
Anyone working for your business in return for payment may need to be covered by your policy.
Your policy must cover you for at least £5 million as a legal requirement. However, policies will typically cover you £10 million as the industry standard.
The higher risk the business, the more expensive your policy will be, but it's essential that you're adequately covered.
Most people who work for your business will need to be covered by employers' liability insurance. However, there are some exceptions depending on their working relationship with you.
If you're unsure whether your business needs cover, seek professional advice.
You'll usually need to cover people who work for your business, including:
If you have people working for you, you're generally required to have insurance in place to protect them.
Anyone you hire on a short-term or reduced-hours basis is typically treated the same as full-time staff for insurance purposes.
Young people gaining experience with your business are usually considered part of your workforce while they're with you.
Volunteers will still be working on your premises, even if it’s not paid work. If you have an existing policy, before taking on volunteer workers, you should check that volunteers are covered.
Some subcontractors may need to be included on your policy.
If you're unsure, check official HSE guidance or seek professional advice.
Usually need cover because they work under your supervision and use equipment you provide
May not need cover if they work for multiple businesses and operate independently
You may not need employers' liability insurance for the following:
Cover is generally not required where there are no staff on the payroll.
Exemption may apply if you're the only employee of a limited company and hold at least half of its shares.
Policies may not be necessary when all workers are close family members.
Certain organisations, such as government departments and NHS bodies, are typically excluded.
The cost of employers’ liability insurance depends on your business, the number of employees you have, and the level of cover you choose.
Policies are typically priced per year, although some insurers allow you to pay monthly. Small businesses with lower-risk activities may be able to find affordable employers’ liability insurance, while companies in higher-risk industries may pay more.
Bigger teams increase the potential risk of claims
Higher-risk industries may face higher premiums
Policies must provide at least £5 million, though many offer £10 million as standard.
Compensation payments
If an employee successfully claims compensation for a work-related injury or illness
Legal costs
The cost of defending or settling a claim made by an employee
Medical expenses
Treatment costs related to an injury or illness caused by work
Loss of earnings
Compensation for wages an employee loses while recovering
Claims from former employees
Employees can still make a claim after leaving your business if they can prove their injury or illness was caused by work they carried out while employed by you
Deliberate acts
Injuries or illness caused intentionally
Incidents outside work duties
Injuries that happen outside the course of employment
Offshore incidents
Claims relating to employees working offshore are usually excluded
Travel-related injuries
Incidents that occur while travelling may instead fall under motor or travel insurance
Employers’ liability insurance protects your business if an employee claims compensation for a work-related injury or illness.
If you're found legally responsible, your insurer can help cover the cost of the claim. Here's how it works...
Explore information on starting a business, registering as self-employed and choosing cover
You can be fined £2,500 for every day you’re not insured. You can also be fined £1,000 if you don’t display your ELCI (Employers' Liability Compulsory Insurance) certificate or don't make it available to inspectors when they ask.
Your employers’ liability insurance certificate must be displayed in a prominent place at work, somewhere everyone in your business can easily access it. For example, you could place it in a staffroom or a hallway.
Yes, you can buy a combined policy that includes both employers’ liability and public liability insurance. This is called combined liability insurance and might work out cheaper than two separate policies.
Some combined liability policies also include business interruption and professional indemnity cover as part of a single business insurance package.
Amy helps make sure you get the best value when choosing insurance. Thanks to more than four years’ experience at Compare the Market, she understands what people look for, working closely with insurance providers to offer you deals and services that are fair, easy to understand and right for your needs.
1 Based on the % of respondents reporting Compare the Market is their preferred brand in the last 12 months vs. other leading PCWs. Source: Savanta BrandVue Financial Services, National Representative Survey of 12,257 respondents (June 2026)
What our expert says...
“Workplace injuries are still alarmingly high. According to HSE's Health and Safety at Work statistics for 2024/2025, there were nearly 59,000 workplace injuries in Great Britain reported by employees. The number of workers suffering from work-related ill health was 1.9 million.
"Employing people adds greater responsibility and increases the potential risk of claims or needing to pay compensation. Ensuring you have the right employers’ liability policy in place provides vital protection for both your business and your employees.”