Question 1

What is employers' liability insurance, and is it compulsory?

Accepted Answer

**Employers' liability (EL) insurance** covers an employer's legal liability for **injury or illness suffered by employees** arising out of their work — and in the UK it is **compulsory by law** for almost every business with employees.

**The legal requirement.** Under the Employers' Liability (Compulsory Insurance) Act 1969, an employer must hold EL cover with an authorised insurer. The minimum required by law is **£5 million**, although most policies are issued at **£10 million** as standard because insurers price it that way.

**Penalties.** Trading without it can attract a substantial fine **per day** uninsured, enforced by the Health and Safety Executive, and further penalties for failing to display or produce the certificate.

**The certificate must be accessible** to employees — historically displayed on a wall, now permitted electronically provided staff can access it readily. Old certificates should be **retained for many years**, because some conditions, notably asbestos-related disease, emerge decades after exposure and the claim goes back to the policy in force at the time.

**Who counts as an employee** — the point most often got wrong. It extends well beyond permanent staff, and typically includes casual and temporary workers, seasonal staff, people on work experience or placements, apprentices, volunteers in many circumstances, and labour-only subcontractors who work under your direction. **Whether someone is described as self-employed is not decisive** — the test is the substance of the relationship, and misjudging it is a common and expensive error.

**The main exemption** covers some family businesses where all employees are close relatives, and companies with a single employee who is also the sole shareholder owning a majority of the share capital. **Check the current HSE position**, as the exemptions are narrow and specific.

**What it is not.** EL is distinct from **public liability**, which covers injury or damage to third parties such as customers and passers-by, and which is **not** compulsory in most sectors but is frequently required contractually.

**What it actually pays:** compensation, legal costs and defence costs, which can be substantial even where a claim fails.

General information, not legal advice.

Question 2

What happens if my insurance company goes bust?

Accepted Answer

In the UK, the Financial Services Compensation Scheme (FSCS) exists for exactly this, and insurance is among the better-protected products — but the level of protection depends on the type of cover.

Question 3

What is public liability insurance and who needs it?

Accepted Answer

Public liability insurance covers your legal liability if your business activities cause injury to a member of the public or damage to their property, including the legal costs of defending a claim.

Question 4

Is legal expenses cover on my insurance worth having?

Accepted Answer

Legal expenses insurance (LEI), usually sold as a modest add-on to motor or home policies, funds legal costs for pursuing or defending certain disputes. Whether it is worth the money depends on what

Question 5

What is professional indemnity insurance and who needs it?

Accepted Answer

Professional indemnity (PI) insurance covers claims arising from the advice or services you provide — errors, omissions, negligence, or work that fails to meet the expected standard. It also covers

Question 6

What type of business insurance do freelancers need?

Accepted Answer

Freelancers need various types of business insurance, including general liability, professional liability, and property insurance, to protect against risks and ensure financial stability.

Question 7

How do insurers decide how much a claim is worth?

Accepted Answer

By applying the policy's basis of settlement to an assessed loss, then deducting anything the policy allows. The figure is rarely what you paid or what you feel it is worth. The sequence, broadly:

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