The main difference between public and employer’s liability is that for most businesses employer’s liability is a legal requirement.
There are other differences including the fact that employers’ liability insurance cannot be purchased as a standalone product, whereas public liability cover can. If you employ people and require employers’ liability insurance then you would likely need to purchase public liability alongside it.
In some cases though, public liability may also be contractually compulsory, for example when you are working on a local council or government project where you may need £5 million and sometimes £10 million worth of cover.
Public liability insurance is a policy that could cover your business in the event of claims arising from third party illness, injury or property damage as a result of your business operations or negligence.
Employer’s liability insurance however could cover disease and/or injury to your employees arising as a direct result of their employment with you.
Are there exemptions?
There are some special circumstances which exclude the need for an employer’s liability policy, including:
- Most public organisations such as government departments, local authorities, police authorities etc
- Health services such as NHS, primary care trusts and Scottish health boards
- Organisations financed by public finding
- Family-run businesses where all employees are closely related (excluding limited companies)
- Companies employing only an equal partner
Unless one of the above applies to you, you will legally require employer’s liability under the Employer’s Liability Act.
Recognising that you have employees
If you have workers under a contract service or apprenticeship, whether confirmed as such verbally, written or even implied you will be legally obliged to insure them as your employees with an employer’s liability policy.
You can identify employees as such if you:
- Deduct national insurance and income tax from what you pay them
- Supply them with equipment and materials
- Control when, how and where they work
- Profit from work they have carried out
- Deny them the ability to sub-contract
What happens if you don’t have employer’s liability insurance?
If you are legally obligated to have an employer’s liability and you fail to implement a policy, you could face a fine of up to £2,500 for every day that you have been without adequate cover for your employees.
If you fail to produce adequate proof of cover in the form of a certificate to a HSE inspector, you could be fined an additional £1,000.