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Fact checker
Last updated
March 11th, 2024

What is employers' liability insurance?

Employers’ liability insurance is a type of cover that protects employers if their employees become ill or injured due to their work. It provides coverage for legal expenses, compensation payments and certain other costs associated with such claims.

In the UK, the Employers’ Liability Act 1969 requires most businesses to have employers’ liability insurance if they have one or more employees. You must get cover for at least £5 million as soon as you become an employer, and this must be provided by an authorised insurer.

How does it work?

Here's how employers' liability insurance typically works:

  • Cover: The policy provides cover for claims made against the employer by an employee who has suffered an injury or illness as a result of their work.

  • Protection: Employers' liability insurance protects employers from the financial burden of paying compensation to an employee, which could include money to cover medical expenses and loss of income, as well as legal fees and other related costs.

  • Limits: The policy will have a limit on the amount of coverage provided, and the employer will be required to pay a premium to maintain the policy.

  • Claims: If an employee is injured or becomes ill while on the job, they can file a claim with the employer's insurance company, usually with the help of a solicitor. The insurer will investigate the claim and determine if it is covered by the policy. If it is covered, the insurer will work with the employer to provide compensation to the employee.

Claims made by third parties, such as customers or members of the public, require a different type of insurance policy, such as public liability insurance or professional indemnity insurance.

No. of workplace injuries in 2022/23[1]
Employer liability insurance can act as a safeguard for businesses as it provides financial protection against potential legal claims arising from workplace accidents or injuries. It not only helps to protect your business' assets, but it also fosters a more secure work environment.

How to choose an employer liability insurance policy

Choosing an employers’ liability insurance policy involves a few steps. Here are some of the key steps:

Determine if you need it

UK law requires most businesses with employees to have employers’ liability insurance. However, there are some exceptions, such as if you only employ family members or if you are a sole trader. Check if you need it or if you are exempt.

Identify the cover you need

Consider the risks that your employees face on the job and determine the cover limits you need. You’ll need coverage for accidents, illnesses, and injuries that occur at the workplace or elsewhere.

Compare policies

Get employer liability insurance quotes from different insurance providers to find the one that best meets your coverage needs and budget. Consider the cover limits, exclusions and premiums.

Review the policy documents

Go over the policy documents carefully before signing up for the insurance. Make sure you understand the coverage, exclusions and any limitations or conditions.

Purchase the policy

Once you have selected an insurance provider and policy, purchase the policy and make sure you have the necessary documentation to demonstrate that you have employers’ liability insurance in compliance with UK law.

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What does employers’ liability insurance cover?


Compensation for injuries and illnesses sustained by employees while working for the employer
Legal fees and expenses incurred by the employer in defending a claim made against them by an employee
The costs of medical treatment for sick or injured employees
Costs associated with settling a claim made by an employee, including damages and legal fees
Temporary and permanent loss of earnings for the employee as a result of the injury or illness

Not covered

Claims made by self-employed individuals
Claims arising from incidents that occurred before the policy came into effect
Claims made by employees who were not carrying out work for the employer at the time of the incident
Claims made as a result of an employer's intentional or criminal actions

How much does employers’ liability insurance cost?

Typically, the cost of employers' liability insurance can range from less than a hundred pounds to thousands of pounds per year.

What you pay depends on a number of factors, including the nature of your industry, the level of risk associated with your business operations and, most of all, the size of your business.

Generally, larger businesses with more employees pay higher premiums due to the increased risk of workplace accidents and injuries.

Other factors that can influence the cost of employers' liability insurance include the level of coverage you require, your claims history, and your business's health and safety record.

It is important to shop around and compare quotes from different insurers to find the best coverage and price for your business.

Business ActivitiesMonthly premiums from*Monthly premiums to**
Professional services £1.86£14.54
Food and Drink £1.07£13.93

*Superscript: 10% of Superscript customers paid this much, or less, between October and December 2023.

**Superscript: 90% of Superscript customers paid this much between October and December 2023.

These prices should only be used as a guide. When you get a quote, it will be tailored to your unique circumstances and risk profile – so you may be quoted a price that’s a bit higher or lower.

And as with most covers, price shouldn’t be your only priority. Cheaper insurance could end up costing you more if it doesn’t provide the cover you need. To get the best deal, look for insurers that allow you to tailor your policy to your needs so you're not left over- or under-insured.

What if I don't have employers' liability insurance?

Here are some of the potential consequences of not having employers’ liability insurance:

  • Fines and penalties: Failure to have employers’ liability insurance can result in fines of up to £2,500 per day for each day that you are not insured.

  • Legal action: If one of your employees is injured or becomes ill as a result of their work, they may take legal action against you to recover damages. Without employers’ liability insurance, you may be personally liable for the costs of the claim, including any compensation awarded to the employee and legal fees.

  • Business interruption: If you are found to be in breach of the legal requirement to have employers’ liability insurance, you may be forced to stop trading until you can obtain the necessary insurance. This could result in significant business interruption and loss of income.

Not having employers’ liability insurance can have serious consequences. It is important to ensure that you have the necessary insurance in place to protect your business, your employees and yourself.

Not having the necessary insurance in place could also damage your business' reputation and make it difficult to attract and retain staff in the future.”


How long does an employers' liability policy last?

It usually lasts 12 months, with the option to renew at the end of the policy. Your insurer will contact you 30 days before your policy is due to end.

How much does employers' liability cost?

It is based on how many employees you have, your turnover and the type of business you run. The higher these things are, the more you will pay.

What if I do not have employers' liability insurance?

If you’re legally required to have employers’ liability but don’t get adequate cover, you could be fined up to £2,500 for every day you do not have insurance.

Who is exempt from employers’ liability insurance?

You don’t need to take out employers’ liability insurance if you only employ family members, such as a spouse, parent, grandparent, sibling, son or daughter. You also don’t need it if you only employ people who are based abroad.

When do I need employers’ liability insurance?

You need employers’ liability insurance as soon as you become an employer of one or more people. Your policy must have coverage of at least £5 million and be from an insurer authorised by the Financial Conduct Authority.

Do I need employers' liability if my staff are volunteers?

Yes, you need it if you have paid or voluntary staff, apprentices or work experience placements.

Does it cost to claim on employers' liability insurance?

No, you do not have to pay an excess to claim on your employers' liability insurance.

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About the author

Salman Haqqi
Salman Haqqi spent over a decade as a journalist reporting in several countries around the world. Now as a personal finance expert, he helps people make informed financial decisions.

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1. Health and Safety Executive 561,000 working people sustained an injury at work according to the Labour Force Survey