Employer's liability insurance: Do you need it?

Published Tuesday 22 September 2026

Table of contents

• What is employers' liability insurance?
• Do you need employers' liability insurance?
• What does employers' liability insurance cover?
• How much does employers' liability insurance cost?
• Employers' liability vs public liability insurance
• Your employers' liability certificate and compliance
• How to get employers' liability insurance
• Simplify your employer admin with Xero
• FAQs on employers' liability insurance

Key takeaways

• Employers' liability insurance is a legal requirement for most UK employers, and you need it as soon as you take on staff.
• You must hold at least £5 million of cover from an insurer authorised by the Financial Conduct Authority (FCA), though many policies provide £10 million.
• Going without adequate cover can lead to a fine of up to £2,500 for every day you're not insured.
• This is a separate product from public liability insurance, which covers claims from members of the public rather than your employees.

What is employers' liability insurance?

Employers' liability insurance covers the compensation and legal costs you could face if one of your employees is injured or becomes ill because of the work they do for you. Aside from your employer responsibilities, it also protects your business when a member of staff makes a claim against you.

If an employee has an accident at work or develops a health condition linked to their job, they can seek compensation from you. This cover pays out so those costs don't come straight from your business. It also covers the legal costs of defending a claim, whether or not you're found at fault.

Do you need employers' liability insurance?

Yes. If you employ staff in the UK, you're legally required to hold employers' liability insurance as soon as you become an employer.

This duty comes from the Employers' Liability (Compulsory Insurance) Act 1969. The rule applies from the day you take on your first member of staff, so you shouldn't wait until someone starts to arrange cover. You can read the official guidance on the government's employers' liability insurance page.

Who's exempt?

A small number of businesses don't need employers' liability insurance, though most employers do. You may be exempt if any of the following apply to you:

• You employ only close family members. This covers a spouse, civil partner, parent, child or sibling, unless you're a limited company.
• Your staff are based only outside England, Scotland, and Wales. Workers based in these three nations must be covered.
• You run a limited company with a single employee who owns most of the shares. A company with just one employee who holds 50% or more of the shares is generally exempt.

Northern Ireland has its own equivalent requirement, so check the rules that apply there if you employ staff in that nation.

What does employers' liability insurance cover?

Employers' liability insurance covers claims from the people who work for you when they're harmed because of that work. That includes workplace injuries, work-related illness, and the legal costs of defending a claim.

The cover often extends beyond your permanent, full-time team. Depending on your policy, the people who count as your employees can include:

• Full-time and part-time staff: Anyone on your payroll is usually covered.
• Temporary and seasonal workers: Short-term staff you bring in during busy periods often count, too.
• Apprentices: People learning a trade with you are treated as employees.
• Volunteers: Unpaid helpers working under your direction may be included.
• Some contractors: Contractors you supervise closely can be covered, so check how your policy defines them.

The claims it pays out relate to harm caused by work, such as an injury from an accident on site or an illness that develops over time. It also meets the legal defence costs that come with responding to a claim.

How much does employers' liability insurance cost?

The cost of employers' liability insurance varies by business, and policies commonly start from a few pounds a month. What you pay depends on your industry, the size of your team, and your claims history.

A few factors shape your premium:

• Your industry and risk level: Higher-risk trades such as construction usually pay more than low-risk office work.
• The number of employees you have: More staff generally means a higher premium.
• Your claims history: A record of past claims can push the price up.

Whatever the price, your policy must provide at least £5 million of cover to meet the legal minimum. Many insurers offer £10 million as standard, which gives you more headroom if a large claim ever lands.

Employers' liability vs public liability insurance

The two types of liability insurance, employers' and public, protect against different risks. Employers' liability covers claims from your own staff, while public liability covers claims from members of the public or your clients.

The clearest way to tell them apart is who the claim comes from. If an employee is hurt because of their work, that's an employers' liability matter. If a customer, visitor or passer-by is injured, or their property is damaged, that falls under public liability.

There's another key difference. Employers' liability insurance is a legal requirement once you employ staff, whereas public liability insurance isn't compulsory. Even so, many businesses choose to hold public liability cover because clients and venues often expect it.

Your employers' liability certificate and compliance

When you buy a policy, your insurer gives you an employers' liability certificate that proves you hold valid cover. You must make it available to your staff and show it to inspectors from the Health and Safety Executive (HSE) when they ask.

You can display the certificate on a noticeboard or share it electronically, as long as your employees can read it easily. The HSE enforces these rules and can inspect your business, so keep the certificate somewhere you can reach it quickly. You can find more about your duties through the HSE website.

Failing to display or provide the certificate can lead to a fine of up to £1,000. It helps to store it alongside your other staff and payroll records so nothing goes missing.

How to get employers' liability insurance

Getting employers' liability insurance is straightforward once you know who you employ and how much cover you need. Follow these steps to put a policy in place and stay compliant.

1. Work out who you employ. List your full-time, part-time, temporary, and any other staff so you know exactly who needs covering.
2. Decide on your cover level. Choose at least the £5 million legal minimum, and consider £10 million if your insurer offers it.
3. Buy from an FCA-authorised insurer. Check that your provider is authorised by the Financial Conduct Authority so your policy is valid.
4. Get and store your certificate. Keep the employers' liability certificate accessible to staff and ready to show HSE inspectors.
5. Review your cover as your team grows. Update your policy when you take on more people or change what your business does.

Keeping accurate records of who works for you makes each of these steps easier, and staying on top of payroll and staff records supports your wider employer duties too.

Simplify your employer admin with Xero

Taking on staff brings new admin, from running payroll to keeping the right records for compliance. Xero brings your employer tasks together in one place, helping you spend less time on manual work and more time running your business.

With cloud-based payroll software, you can pay your team, handle deductions, and keep organised records that sit ready when you need them. That makes it simpler to track who you employ and support obligations like your employers' liability cover.

Ready to make employer admin simpler? Get one month free.

FAQs on employers' liability insurance

Here are answers to some common questions UK employers ask about employers' liability insurance.

What does employers' liability insurance cover?

It covers compensation and legal costs when an employee is injured or becomes ill because of their work. The definition of employee can extend to temps, apprentices, and some contractors, depending on your policy.

Is employers' liability insurance a legal requirement?

Yes. Under the Employers' Liability (Compulsory Insurance) Act 1969, you must hold it as soon as you employ staff, unless a specific exemption applies to your business.

How much is employers' liability insurance?

Policies commonly start from a few pounds a month, and the price depends on your industry, team size, and claims history. Your cover must be at least £5 million to meet the legal minimum.

What happens if you don't have employers' liability insurance?

You can be fined up to £2,500 for every day you're without adequate cover, and this is enforced by the HSE rather than HMRC (His Majesty’s Revenue and Customs). A separate fine of up to £1,000 applies if you don't display or provide your certificate when asked.