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How Much is Employers’ Liability Insurance?

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Employers’ liability insurance is a legal requirement, so it’s a certain expense for which businesses with employees need to budget. But how much does it cost? According to business insurance specialist NimbleFins, employers’ liability insurance costs in the range of £50 to £300 for one employee depending on the danger of the job; the premium then rises with the number of employees.

How much is employers liability insurance: average cost per employee

One office worker in a low-risk industry can cost as little as £50 to insure in the UK’s employers’ liability (EL) insurance market.  Office workers in higher-risk industries, for instance, a building company office manager, could cost 60% more to insure.

Workers that perform riskier tasks and are out working in the main business cost more to insure. For example, the EL insurance for a single construction company worker could cost nearly £300 per year. A caterer might cost closer to £200 to insure per employee.

Businesses pay less per additional employee. So if the first employee costs £250 to insure, the cost for 5 employees would probably come in under £1,000. This is because the odds are higher that one employee is injured on the job but are quite low that multiple or all employees are injured.

How much employers’ liability insurance do I need?

The minimum amount of employers’ liability insurance that is required by law is £5 million of cover. This means that the limit of insurance on an EL policy must be at least £5 million, even for a small business with just one or two employees.

This £5 million minimum is the amount specified in The Employers’ Liability (Compulsory Insurance) Regulations 1998.

Larger businesses might want to secure a policy with a higher limit of insurance, for instance, £10 million.

Businesses that engage in risky work might also want a higher limit of cover. For example, construction, manufacturing, agriculture, forestry, and fishing businesses could need more cover than a typical business. These industries have notoriously high levels of employee injury and death. In fact, the HSE reported that in 2020 these industries had the highest number of worker fatalities in Great Britain.

What is employers’ liability insurance?

Employers’ liability insurance in the UK is financial and legal protection against claims made by current and former employees who allege they fell ill or sustained an injury while working for the business. Essentially it means the place of work is held responsible – or liable – for the illness or injury.

The insurance covers the legal costs of representation as well as compensation payments agreed. Even if a business is diligent, it may be chased for an unfounded compensation claim, and this insurance will fund the legal costs associated with defending a case.

Equally, employers are still expected to follow strict health and safety guidelines as employers’ liability insurance is not an excuse to be neglectful in protecting workers. If a business is found to have been negligent, an insurance company could sue the business for compensation.

Employers’ liability insurance also covers death at work, with compensation paid out to the family of the deceased.

Do I need employers’ liability insurance if I have no employees?

If a limited company does not have any employees and the sole director owns at least 50% of the business, it probably does not need employers’ liability insurance. However, some clients may require employers’ liability insurance to work with a business.

Keep in mind that some sole traders opt to take out a personal accident or income replacement insurance in case they are injured or fall ill, which are separate from employers’ liability insurance. When a self-employed worker is not able to trade, they are not making money. These types of coverage pay a proportion of lost pay until the sole trader is back on their feet.

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