Ultimate Guide to Public and Employers' Liability Insurance

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According to Companies House, employers' liability and public liability are two of the most common types of business insurance in the UK. These two types of business liability insurance cover injury and damage claims from employees and third parties like customers, respectively.

But whether you're new to these coverages or not, you probably have some questions. Why are public and employers' liability insurance so important? Does your business need both types of cover? How much will it cost? Where can you find reliable quotes? We answer these and other important questions for you below.

What's the difference between Public and Employers' Liability insurance?

Public liability covers claims made by third parties (e.g., customers).
Employers' liability covers claims made by your employees.

Public liability and employers' liability insurance each cover claims made against your business from a different type of party. Public liability insurance covers claims made by third parties like customers, clients, members of the public or other people unrelated to your business; employers' liability covers claims made by your employees. Both essentially protect against claims that your business has caused injury or damage, and will cover the cost to defend your business (i.e., legal fees) as well as any compensation you're found liable to pay.

Why are Public and Employers' Liability insurance important?

Public and employers' liability insurance are very important because they can protect both your business and other parties in situations where it's claimed that your business has caused injury or damage. Injury and damage lawsuits can cost thousands of pounds to defend, and even more in compensation claims—having the right cover in place can protect your business from significant financial harm and can provide ample compensation to injured parties where necessary.

  • Public liability isn't required by law, but it may be a condition of contracts you sign with your landlord, vendors, clients or other parties. While not a legal requirement it is highly recommended and provides peace of mind.
  • Employers' liability is a legal requirement in almost all situations where your business has hired workers. Where required, the minimum EL cover is £5 million.

What do Public and Employers' Liability Insurance Cover?

Public and employers' liability insurance pay for legal expenses to defend your business in event of a claim, as well as compensatory damages your business is found liable to pay. Public liability covers claims of accidental injury to third parties or damage to their property. Employers' liability covers claims of illness or injury due to work made by your employees.

Public Liability (PL)

Quick Definition: PL insurance can protect against claims that your business has caused injury to a third party (e.g., customers, members of the public, etc.) or damage to their property.

Employers' Liability (EL)

Quick Definition: EL insurance can protect against claims made against your business by employees who allege that working for your business has caused them illness or injury.

  • Read more in our employers' liability guide.

Who needs Public and Employers' Liability insurance?

Companies with any in-person exposure to third parties (or their property) should have public liability insurance. Third parties can include your landlord, vendors, clients, customers, passersby and other members of the public. Here are some examples of situations where a business needs public liability insurance:

Examples of situations where a business needs public liability insurance:

  • As part of your business you visit clients at their homes or places of business
  • You run a shop where customers or members of the public stop in
  • Your business is run out of a warehouse that vendors visit
  • You are a market stall trader selling goods at private and/or public events

Companies with any employees are required by law to hold employers' liability insurance, with a few exceptions (e.g., family businesses hiring close family members, so long as the family business is not registered as a limited company) Read more about when a business needs, or doesn't need, employers' liability in our article here.

Examples of situations where a business needs employers' liability insurance:

  • A sole trader who hires part-time, temporary workers to help during a seasonal rush
  • A business hiring full-time employees
  • Volunteers start working for your business
  • A family business that is incorporated as a limited company

You can also read more about who needs employers' liability insurance in the HSE guide to employers about the Employers’ Liability (Compulsory Insurance) Act 1969.

Public and Employers' Liability Claims Examples

Below are some examples of potential claims situations where a business can benefit from public and employers' liability insurance.

  • A customer in a cafe slipped on a freshly-mopped floor, injuring their back.
  • A tradesperson fell from a ladder and blamed their employer for providing faulty equipment.
  • A volunteer tripped over a power cord and made a claim was made against the business.
  • A cleaner tried a new product on a client's hardwood floors, causing irrevocable damage.
  • A plumber caused damage to a client's home when he accidentally dropped a ladder down the stairs.

You can also read in depth about some real-life examples of public liability insurance from popular insurer Hiscox.

Average Cost of Public and Employers' Liability Insurance

The cost of public and employers' liability business insurance is highly variable, starting from around £100 a year but rising into the thousands of pounds a year for some businesses. The price of cover mostly depends on the type of work your business does and the number of employees.

Riskier lines of work cost more to insure—from both a public liability and an employers' liability point of view. For example, there's more risk of an accident at a building site causing a construction company to be found liable for injury or damage to a third party or an employee, when compared to a less hazardous occupation like business consultant.

Chart showing the average cost of public and employers' liability insurance UK
Public and employers' liability insurance costs are highly variable from one business to the next.

Also, the number of employees plays a large role in the cost of cover. The more employees, the more expensive a business's EL insurance. That said, each additional employee typically costs a little bit less to insure, as you can see in the table below.

Average Cost of Public and Employers' Liability Insurance1 office worker1 employee2 employees5 employees
Lower risk (e.g., caterer)£172£303£352£646
Moderate risk (e.g. cleaner)£103£231£341£715
Higher risk (e.g., builder)£307£504£767£1,298

Please use these quotes as an indication of prices only; quotes are highly variable and depend on dozens of factors, so you could pay significantly more or less than the figures presented here.

Where can I get Public and Employers' Liability quotes?

Fill out a quote form here and our commercial insurance search engine partner QuoteZone will connect you with up to 5 insurance providers. You’ll have a chance to build a policy to fit your needs specifically, and ask any questions you might have before signing up.

In addition you can compare prices before you buy by also using another search engine such as Simply Business or find a BIBA broker using their search tool.

Before you sign on the dotted line, be sure that an insurer is qualified to offer insurance by checking the Financial Services Register, which is maintained by the Financial Conduct Authority.

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You can also opt to get quotes directly from an insurance provider that offers combined public and employers' liability cover such as Direct Line, but remember you'll only get one quote so there's a risk you'll overpay. Even if you decide going direct is the best option for you, be sure to check quotes elsewhere even if just to give yourself comfort that you're getting a good deal.

FAQs

The benefit of buying a combined public and employers' liability insurance policy is primarily convenience. You'll have one premium to pay, one renewal date to remember, and one company to deal with if you need to make any changes to your policy. Plus they might give you a discount for buying more than one type of cover.

Definition: Combined public and employers' liability insurance protects against injury and damage claims made against your business by third parties like customers (the public liability portion of cover) and by employees (the employers' liability portion of cover). Both types cover legal costs to defend your company as well as required compensation payments your business is found liable to pay.

Yes, you don't have to buy your employers' liability and public liability insurance from the same insurer. If you want to do this, your best best might be using a broker to understand why you want to do this and help you find the best insurer for your needs.

The Employers' Liability Tracing Office (ELTO) keeps a record of all EL insurers that provide employers' liability insurance in the UK.
Erin Yurday

Erin Yurday is the CEO, Co-founder and Editor of NimbleFins. Prior to NimbleFins, she worked as an investment professional and as the finance expert in Stanford University's Graduate School of Business case writing team. Read more on LinkedIn.

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