What is employers' liability insurance?
Employers' liability insurance is a policy that covers an employer's legal liability to pay compensation to employees who are injured or made ill as a result of their work. When a court awards damages, or a claim settles, the insurer pays the compensation directly. The employer does not ordinarily pay out of their own funds.
The legal foundation is the Employers' Liability (Compulsory Insurance) Act 1969, which came into force on 1 January 1972 and has applied to virtually all UK employers with at least one employee ever since. The Act makes it a criminal offence to carry on business without holding an approved policy with an authorised insurer.
Employers' liability insurance is distinct from public liability insurance. Public liability covers claims by members of the public or customers injured by a business's operations. Employers' liability insurance covers claims by the business's own employees and workers, including agency workers placed at the employer's premises.
Who must have employers' liability insurance?
The Employers' Liability (Compulsory Insurance) Act 1969 and the Employers' Liability (Compulsory Insurance) Regulations 1998 require employers' liability insurance from any business that employs one or more people under a contract of employment or apprenticeship. This applies regardless of the size of the business, whether the employment is full-time, part-time, or temporary, and whether the work takes place in the UK or overseas.
Limited exemptions exist for:
- Family businesses where all employees are close relatives of the employer (spouse, parent, child, grandparent, grandchild, sibling)
- Nationalised industries and certain public bodies that are covered by Crown immunity
- Companies where the sole employee owns more than 50% of the shares
Most employers that injured workers encounter will not fall within any exemption. A sole trader with one employee must hold the policy. A limited company with one director-employee who is not the sole shareholder must hold it. In practice, if you were injured at work, your employer almost certainly had a legal duty to hold employers' liability insurance at the time of your accident.
What does the insurance certificate tell you?
The Employers' Liability (Compulsory Insurance) Regulations 1998 require employers to display their current employers' liability insurance certificate either at every workplace (as a physical notice) or electronically in a format that every employee can access. The certificate must state:
- The name of the insurer
- The name of the insured (the employer)
- The period of insurance
- The minimum level of cover (at least £5 million per claim)
The certificate is the starting point for identifying which insurer will handle your compensation claim. If you cannot locate it, your employer is obliged to provide it on request. If they refuse or claim they do not have one, that is itself a significant legal issue.
How does employers' liability insurance affect your compensation claim?
When you bring a workplace injury claim, you are claiming against your employer. But in almost every case, the party that actually defends the claim and pays any damages is the employer's liability insurer. The insurer:
- Investigates the claim on the employer's behalf
- Decides whether to admit or contest liability
- Negotiates the settlement figure (or defends at trial)
- Pays compensation and legal costs if the claim succeeds
This is important for two reasons. First, it means your claim does not depend on your employer's financial position. Even if the business is small or struggling, the insurer is required to meet a successful claim up to the policy limit. Second, it explains why the decision to defend or settle a claim is driven by the insurer's own legal and commercial assessment, not by your employer's personal attitude to you.
For a guide to the stages of the claim from the letter of claim to settlement, see our claims process guide.
Does employers' liability insurance cover the full value of my claim?
The minimum statutory cover is £5 million per claim. Most employers hold policies providing £10 million cover, and larger employers often hold significantly more. In practice, the total value of UK workplace injury claims almost never approaches these limits: a serious spinal injury or fatal accident claim might reach £1 million to £2 million in exceptional circumstances, but the vast majority settle well below that figure.
The one situation where policy limits matter is in a claim involving catastrophic injury (severe traumatic brain injury, high-level spinal cord injury) where the lifetime care and future earnings elements push the total damages above £5 million. In those cases, the insurer's obligation is limited to the policy limit, and anything above it falls to the employer.
What happens if my employer has no employers' liability insurance?
An employer who is trading without employers' liability insurance is committing a criminal offence and is liable to a fine of up to £2,500 for each day without valid cover, enforced by the HSE. Separately, a failure to display the certificate attracts a £1,000 fine.
If you are injured and your employer has no insurance, your claim is not automatically lost. Options include:
Pursuing the employer directly. A compensation award is still enforceable against an uninsured employer through the courts. In practice, an employer without insurance is often also without the funds to satisfy a judgment, which is the underlying problem.
The Employers' Liability Tracing Office (ELTO). ELTO holds a database of employers' liability policies going back decades. If your employer had insurance at some point and there is a question about which insurer was on risk at the date of your accident (common in industrial disease claims covering many years of exposure), ELTO is the tool used to identify the relevant insurer.
The Financial Services Compensation Scheme (FSCS). If the insurer itself has become insolvent, the FSCS may meet claims against it, subject to FSCS rules.
If you are in a situation where your employer appears to be uninsured, specialist legal advice is essential. The route to compensation is more complex but is not closed. For how to find a regulated solicitor, see our no win no fee guide.
Why does employers' liability insurance mean you should not fear making a claim?
One of the most common reasons injured workers delay or avoid bringing a claim is fear of the financial consequences for their employer: a small business, a family firm, or an employer they otherwise like. Employers' liability insurance is why this concern, though understandable, is misplaced.
The compensation in a workplace injury claim is not taken from the employer's operating funds or personal savings. It is paid by the insurer, which is why every employer is required by law to hold it. The employer's out-of-pocket cost from a valid claim is typically an excess payment (if any) and the administrative time involved in engaging with the insurer's solicitors.
Separately, the fear of being dismissed for making a claim is addressed directly by section 100 of the Employment Rights Act 1996, which makes it automatically unfair to dismiss an employee for raising a health and safety concern or bringing a claim. For a full guide to this protection, see our dismissal protection page.
What if I am an agency worker or contractor?
Agency workers and contractors occupy a more complex position. As an agency worker, you are placed at a host employer's premises but your contract is with the agency. Whether the agency's employers' liability insurance or the host employer's policy applies to your injury depends on who had day-to-day control over your work and who was responsible for the conditions that caused the injury.
In practice, both the agency and the host employer may share liability, and both should hold employers' liability insurance. Section 3 of the Health and Safety at Work etc. Act 1974 extends the duty of care to persons who are not employees but are affected by the employer's undertaking, which can include genuinely self-employed contractors. The question of which policy applies and who is liable is one for the legal process to resolve, not something you need to determine before instructing a solicitor.
For the employer's specific duties before and after an accident at work, see our employer responsibilities guide.
This guide is for general information only and does not constitute legal advice. Every claim turns on its own facts. For advice about your specific situation, speak to a regulated solicitor. You can find one through the Find a Solicitor service (Law Society) or through APIL.
Frequently asked questions
Do all employers have to have employers' liability insurance?
Almost all employers in the UK are legally required to hold employers' liability insurance under the Employers' Liability (Compulsory Insurance) Act 1969. The main exemptions are family businesses where all staff are close relatives, and certain public bodies. Any employer with one or more non-family employees must hold a policy providing at least £5 million cover per claim.
How do I find out who my employer's liability insurer is?
Ask to see the employers' liability insurance certificate, which must be displayed at every workplace or available electronically. The certificate names the insurer. If your employer cannot or will not produce it, your solicitor can use the ELTO database and pre-action disclosure to identify the insurer during the claims process.
Can I still claim if my employer goes into administration or closes down?
Yes. If the employer held valid insurance, the claim proceeds against the insurer regardless of what happens to the business. If the employer traded without insurance, the FSCS may cover claims where the insurer becomes insolvent. A specialist solicitor can trace the relevant policy through ELTO.
Does employers' liability insurance cover my full compensation?
The minimum statutory cover is £5 million per claim. The vast majority of workplace injury claims settle well within that limit. Only in catastrophic injury cases involving lifetime care and very large loss of earnings claims does the policy limit become a practical issue.
Browse every plain-English guide in the work accident guides hub, or read the main guide to how a claim works.
This guide is for general information only and does not constitute legal advice. Every claim turns on its own facts. For advice about your specific situation, speak to a regulated solicitor.