Employers’ liability insurance was made compulsory in the UK by an act of Parliament in 1969 for most businesses. It covers injuries or sickness to employees and the owners of a business. The type and size of the business usually determines the cost of the premium.

The law specifies that the insurance amount must be for £5 million but most insurers will issue cover for £10 million. It has to cover all the employees that work for a business anywhere in the UK. An employee is defined in several ways. If a person has a contract of service with a business, has income tax and national insurance deducted from the money paid to them, or a business has control of where, when and what type of work they do, then they are considered an employee.

There are some other legal issues that must be in place, and the Health & Safety Executive is in charge of overseeing these. The insurer has to be authorised. This usually entails membership of the Association of British Insurers. A copy of the insurance certificate has to be prominently displayed for employees to read. This could be a physical copy attached to a wall in the premises, or perhaps a specific page on the company’s intranet.

There are some exceptions such as when the business is not a limited company and there is only one employee or all the employees are close family members. If it is a limited company with just one employee who also happens to own over half the business then they too are exempt.