Public and employers liability insurance are quoted together so often that many business owners assume they are one product. They are not. One of them is a commercial choice that your customers and landlords insist on; the other is a legal duty enforced by the Health and Safety Executive with a daily penalty behind it. Knowing which is which decides what you can safely do without and what you cannot.
Employers' liability is the compulsory half
The Employers' Liability (Compulsory Insurance) Act 1969 requires an employer carrying on business in Great Britain to insure against liability for injury or disease sustained by its employees in the course of their employment. The duty attaches to employees rather than to a payroll threshold, so a first part time member of staff, an apprentice or a casual weekend helper can bring a business inside it. The 1998 Regulations set the minimum amount that must be insured and the certificate requirements; the HSE enforces both, and can penalise a day at a time for each day a business trades uninsured.
Public liability is the half your customers require
Public liability answers for injury to members of the public and damage to their property arising from the business. No statute makes it compulsory for a general trading business, and almost every route to work makes it necessary anyway: landlords, letting agents, main contractors, local authority licences, shopping centres, market operators and commercial customers all require evidence of it, and several name the limit. That is why the two are sold together: one is required of you by law, the other by everybody you want to work for.
Why one price covers both
Most UK small business policies bundle employers' liability into a package with public liability, because the two claims arise from the same premises and the same work and are cheaper to underwrite together. The bundle usually carries a statutory minimum level of employers' liability as standard and lets you choose the public liability limit. Where a business has no employees, insurers will normally strip the employers' liability section out and the price falls, which is why a sole trader quote and a small employer quote are not comparable figures.
The certificate, and where it has to be
An employers' liability certificate has to be available to employees, and the Regulations were amended so that displaying it electronically, where employees can reasonably access it, satisfies the requirement. It also has to be kept where an inspector can see it. This is a small administrative point that turns into a real one during an HSE visit, and it costs nothing to get right on the day the policy is issued.
Questions people ask about public and employers liability insurance
Is public and employers liability insurance a legal requirement?
Employers' liability is, for almost every employer carrying on business in Great Britain, under the 1969 Act. Public liability is not required by statute; it is required in practice by landlords, contractors, licensing authorities and commercial customers.
Do I need employers' liability for a subcontractor?
It depends on the relationship rather than the label. Labour only subcontractors who work under your direction are generally treated as employees for this purpose, while bona fide subcontractors running their own business carry their own cover. Insurers ask the question at quote because it changes both the premium and the answer at claim.
What happens if I trade without employers' liability insurance?
The HSE can penalise a business for each day it is uninsured, and can penalise separately for failing to display or produce the certificate. The bigger exposure is the uninsured claim itself, because an injured employee's claim does not disappear when the policy does.
Can I buy public liability on its own?
Yes, and a business with no employees usually does. Once anybody is employed the employers' liability section is not optional, so the two arrive together on the same schedule for almost every business with staff.