Employers' Liability Insurance The Ultimate Guide

If you employ staff, even on a casual, part-time, or temporary basis, Employers’ Liability Insurance is usually a legal requirement.

Here in our Ultimate Guide to Employers’ Liability Insurance, you’ll find everything you’ve ever wanted to know about Employers’ Liability, what it covers, when you need it, when you might not, and how it can benefit your business.

What Is Employers’ Liability Insurance?

Employers’ Liability Insurance (EL) protects your business if an employee suffers an injury at, or illness due to, their work and your business is found legally responsible.

As an employer, you have a duty of care to provide a safe working environment, proper training, and suitable equipment to anyone working under you. If it’s alleged that this duty hasn’t been met, and an employee makes a claim against you, Employers’ Liability Insurance is there to protect your business.

EL protects you for:

• Damages and costs you become legally liable to pay for injury or illness to your employees while they are working for you. This could include compensation for pain and suffering, loss of earnings, or medical expenses.

• Defence costs, where agreed by the insurer, including legal representation and court costs for defending or settling a claim.

Without this cover, those costs would need to be met directly by your business.

What Is Covered?

Employers’ Liability Insurance is designed to protect you if you become legally liable for injury or illness suffered by an employee while they are working for you. That means that if an employee suffers an injury or work-related illness and claims it occurred because of your business activities, the policy can be used to protect your business.

This includes not only the compensation you may be required to pay, but also agreed legal defence and settlement costs associated with handling the claim. Legal fees in these scenarios alone can be significant – even if you ultimately defend the claim successfully – which is why this element of cover is so important.

In practical terms, cover can apply to a wide range of workplace scenarios. For example, an employee might:

• Be injured in an accident on site due to falling materials or uneven ground.

• Fall while working at height.

• Suffer a back or musculoskeletal injury through manual handling.

• Develop a health condition after prolonged exposure to dust, fumes, or hazardous substances.

• Be injured as a result of unsafe working conditions, faulty equipment, or inadequate risk controls.

Trades environments are physically demanding and fast-paced. Even with strong health and safety procedures, accidents can occur. Whether you're a builder, electrician, carpenter or any other trade for that matter, if the business is alleged to have failed in its duty of care, such as through insufficient training, poor supervision, or inadequate risk assessment, a claim may follow.

If you are found legally responsible, the policy can cover compensation awarded to the employee, along with the associated legal costs, up to the limits stated in your policy schedule.

Employers’ Liability Insurance does not pay out automatically after an accident; legal liability must be established. However, costs for investigating and defending a claim can arise before liability is determined, which is where this cover provides crucial financial protection.

What Isn’t Covered?

Employers’ Liability Insurance is specifically designed to cover your business should an employee injure themselves whilst working for you and bring a claim against your business. It does not cover situations where an employee causes injury to a member of the public or damage to third-party property – those types of claims fall under your Public Liability Insurance, not Employers’ Liability.

Cover applies only while you are working within the UK, including Great Britain, Northern Ireland, and the Isle of Man, as stated in your policy documentation. Work carried out overseas is not covered unless specifically agreed.

How Much Does Employers’ Liability Insurance Cost?

The cost of Employers’ Liability Insurance depends on several factors, including:

• The number of people you employ

• Your business turnover

• The risk level of your trade

• Your claims history

Higher-risk trades, such as roofing or groundworks, may attract higher premiums than lower-risk trades. Having more employees increases your exposure and can also impact cost.

Rhino’s Employers’ Liability cover starts from £62.50 per year, providing an affordable and essential safeguard for trades businesses with employees. You can get a quote here.

Is Employers’ Liability Insurance a Legal Requirement?

In most cases, yes.

If you employ one or more people, you are generally required by law to hold Employers’ Liability Insurance. During our quote process, if you select more than one employee, Employers’ Liability Insurance will be automatically added to your Public Liability Insurance. Standalone cover is not available with Rhino.

When Isn’t Employers’ Liability Insurance a Legal Requirement?

Employers’ Liability Insurance is not a legal requirement if you work in a 50/50 partnership or only employ family members.

Who Counts as an Employee?

You may need cover if you use:

• Full-time staff

• Part-time employees

• Apprentices

• Labour-only subcontractors

• Temporary workers, including work experience

If you control how work is carried out, supply materials or equipment, or the individual works mainly for you, they may be legally considered your employee.

If you use bona fide subcontractors, ensure they have suitable insurance that covers their own activities and extends to cover you as the principal.

When Wouldn’t I Need Employers’ Liability Insurance?

You typically would not need Employers’ Liability Insurance if:

• You have no employees

• You never use labour-only subcontractors

• You only use bona fide subcontractors who carry their own insurance

However, the distinction between subcontractor and employee can be unclear. If in doubt, seek clarification. The cost of being uninsured is far higher than the cost of cover.

How Do I Get Employers’ Liability Insurance?

Employers’ Liability Insurance must be purchased with Public Liability Insurance and is automatically added if you select more than one employee. You can get a quote from Rhino online or by calling 0116 243 7904.

When Does Cover Start and End?

Start and end dates are shown in your policy schedule. The insurance period is 12 months.

What If I Take Out Cover and Employ Additional Staff?

You must inform your insurer of the change to your business as soon as possible so they can add the relevant cover and ensure your business is adequately protected.

Can I Cancel My Cover?

You can cancel your cover:

• Within 14 days of receiving the contract documentation for a full refund (provided no claim has been made).

• After 14 days, cancellation is still possible, but a cancellation fee will apply.

Claims Examples – When Covered

Manual Handling Injury

An employee injures their back lifting heavy materials on site and alleges they were not properly trained in safe lifting techniques. If your business is deemed responsible, the policy will cover compensation costs awarded to the employee.

Work-Related Illness

An employee develops a respiratory condition after prolonged exposure to dust and claims that insufficient protective equipment was provided. If your business is deemed responsible, the policy can cover damages and defence costs.

Claims Examples – When Not Covered

Injury to a Member of the Public

Your employee accidentally damages a customer’s property or injures a passerby. This would fall under Public Liability Insurance, not Employers’ Liability.

Final Thoughts

If you employ anyone, even occasionally, Employers’ Liability Insurance is likely a legal requirement and a fundamental safeguard for your business. It covers your legal liability for injury or illness to employees while they are working for you.

In the trades, risk comes with the territory. Employers’ Liability Insurance ensures that if something goes wrong, your business isn’t left exposed.

For full details of cover, limits, and exclusions, refer to your policy wording and schedule. If you have any questions, the Rhino team are available to speak to on 0116 243 7904.