Employers' liability insurance

Employers are legally responsible for the health and safety of their employees while they are at work. Employers’ Liability insurance enables the employer to have protection that will cover the costs of any compensation and legal fees for employees who are injured or made ill as the result of work.

As a freelancer, do I still need this cover?

You will legally require Employers’ Liability insurance unless you are exempt from the Employers’ Liability (Compulsory Insurance) Regulations 1998. Exempt businesses include:

1. Limited companies employing only their owner, who has more than 50% of the issued share capital are exempt (outlined by Department for Work and Pensions)

2. Family businesses, i.e. if all of your employees are closely related to you (as 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 which are incorporated as limited companies.

Important: If you are considering engaging a substitute or are considering entering into a contract with a substitute clause it is worth careful consideration whether this substitute may be considered as your employee for the duration of the contract. It is vital to gain accurate clarification here and you should consult a legal practitioner.

What is legally required?

As a minimum, insurance must cover at least £5 million of Employers’ Liability insurance and must be provided by an approved supplier*. The FSA maintains a list of authorised insurers

Employers are required to display your Employers’ Liability insurance so that it is visible to all employees. This can be displayed electronically, but all employees must be aware of its location and have access to it.

The Health and Safety Executive (who enforce the law) strongly advise that complete record of employers’ liability is kept as: “...Some diseases can appear decade after exposure to their cause and former or current employees may decide to make a claim again their employer for the period they were exposed to the cause of their illness.”

How does the Health and Safety Executive (HSE) enforce the law?

HSE inspectors can ask to see your certificate of insurance at any time. You can be fined up to £2,500 for any day which you are without suitable insurance. If you do not display the certificate of insurance or refuse to show it to HSE inspectors when they ask, you can be fined £1,000.

Motor Insurance

If someone is injured or their property is damaged as the result of a collision caused by you or an employee, motor insurance will cover the cost of paying their claim. Third-party liability insurance is compulsory for all vehicles used on the road. By law your insurance must be unlimited for personal injury and cover £1 million for property damage.

Additional coverage options

Third Party, Fire and Theft, as the name suggests, has the additional cover for loss/damage to your vehicles by fire or theft.

Comprehensive, this is the most complete coverage available and in addition to the protection provided by Third Party, Fire and Theft, it also includes cover for damage to your own vehicle, even if the incident is considered to be your fault.

Useful Resources