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Do You Need Employers Liability Insurance for Family Members?

Rhino Trade Insurance 09 March 2022

Going into business with your family may seem like an easy route and it can seem like an excuse to skip much of the paperwork that goes into running a business, but there are certain duties and responsibilities that business owners must adhere to even when employing members of their family that are often overlooked.

There are thousands of UK tradesmen and women that work in small businesses alongside relatives, or who directly employ members of their family, and in these cases, there can be confusion as to whether a business owner still needs employers’ liability insurance.

Employers Liability Insurance provides cover for the employer against claims arising because of accidental injury or death caused to employees whilst at work. Irrespective of whether your employee is a family member or not, accidents do happen, therefore the risk of a claim being made still exists meaning measures must be taken to protect you and your business.

We are often asked whether a business needs employers liability insurance for family members, and the short answer is that almost all businesses that employ workers, family member or not, are required to take out employer’s liability cover. Unlike more luxury insurances such as tools cover or personal accident insurance, employers’ liability insurance can be compulsory, and is a legal requirement for almost any business that employs staff.

There are some minor exemptions to this rule, set out in the Employers’ Liability (Compulsory Insurance) Act 1969. The exceptions listed are employers that are categorised as follows:

family businesses, i.e., if all of your employees are closely related to you (as a husband, wife, civil partner, father, mother, grandfather, grandmother, stepfather, stepmother, son, daughter, grandson, granddaughter, stepson, stepdaughter, brother, sister, half-brother or half-sister). However, this exemption does not apply to family businesses that are incorporated as limited companies.

This clearly shows that any business operating as a limited Company should have employers’ liability insurance in place, regardless of whether they employ family members. The Insurance Act 1969 outlines clearly who is classed as a family member, and therefore exempt from employers’ liability insurance for businesses that do not have a Limited Company status.

If you operate via a Limited Company and do not have employers’ liability insurance in place, then there can be hefty fines made against you for the time that your business is not covered. By putting employers’ liability in place, even if you only employ family members, you are making sure that your business operates compliantly, and you will work safely in the knowledge that you are covered should anything ever go wrong resulting in an employer’s liability claim.

You can purchase employers’ liability insurance easily with Rhino! Simply go to our online insurance shop and shop around for a liability quote that’s right for you. Remember that we offer employers liability insurance as an add on to our public liability insurance, and prices start at just £6.07 per month.


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