Cordelia Rushby provides a refresher for business owners on their responsibilities regarding two key insurance policies and whether volunteers and work experience students should be insured as “employees”.

Public liability: Public liability insurance is not a legal requirement but it is good business practice. This policy covers your business in the event of claims brought against you by other people (not your employees) for injuries or property damage caused in consequence of your business activities. Having cover is a prerequisite of working for a local authority.

Employer’s liability: It is compulsory to have employer’s liability insurance in all but exceptional circumstances. The Employers’ Liability (Compulsory Insurance) Act 1969 requires employers to have at least £5 million of cover (more depending on the business activity). Most insurance companies provide £10 million of employers’ liability as standard.

Employer’s liability insurance is compulsory because employers are responsible for the health and safety of their employees whilst at work. If an accident occurs and an employee is injured or made ill in consequence of work related activities, they will have a claim for compensation against their employer.

Work experience students and voluntary or unpaid ‘helpers’ are classed as employees and if you retain them, you must have the relevant employer’s liability insurance.

Your insurer will pay the cost of compensation, comprising damages and costs, less any excess you have agreed. Even where a company ceases trading or goes into liquidation, the insurer is still liable for payment for such claims.

The Health and Safety Executive (HSE) enforces the law on employers’ liability insurance. If a company does not have employers liability insurance, it can be fined at a rate of £2,500 for every day the company has traded without it.

The employer’s liability insurance certificate must be displayed where your employees can access it. A company can be fined up to £1,000 for not displaying the certificate or failing to make it available to an HSE inspector.

In the event of an accident, the company will not only be prosecuted for having no insurance, it will remain liable to the injured party and have to pay all the compensation, its own legal costs and the claimant’s costs out of its own funds. In many cases this would result in the company ceasing to trade.


There are a few exceptions, but the most important one to note is that you do not need employer’s liability cover if:

  • you are a sole trader with no staff
  • you run an unincorporated family business (in which all of your employees are closely related to you);
  • the company employs only you the owner, where you own 50% or more of the share capital of the company.

However! If you do fall into one of these exceptions and retain work experience students, or unpaid volunteers you must still have employer’s liability insurance.

Cordelia Rushby has 20 years’ experience defending claims for employers, sharing feedback, providing staff training, and helping to reduce further accidents and claims. Cordelia can be nominated to your insurers to personally handle claims and litigation arising out of accidents at work and breeches of health and safety law. To find out more about how you can make your employer’s or public liability insurance work harder for your company please contact Cordelia Rushby.

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This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.