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IT Contractor Insurance Professional Indemnity insurance, Public / Employers liability - Hiscox.

What is employers liability insurance?

Published on Oct 5, 2009 |

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EL insurance will cover a business if any of its employees become ill, or are injured in workplace, due to the negligence of the employer.

This type of cover insurance will cover the medical costs and damaged incurred, as well as legal fees.

Do I have to have EL insurance?

It is a legal requirement for all employers to have a valid employers liability policy in place, with at least £5m worth of cover.

In fact, if you are not adequately covered, you could be fined up to £2,500 for each day your business is not covered!

However, since 2005, limited companies with a sole employee (where that employee owns 50% or more of the share capital) are not legally required to take out EL cover. Sole traders who don't have any employees (or just close family members) are also exempt.

Despite the lack of a legal requirement, many contractors decide to take out employers liability cover anyway, as a result of the IR35 legislation (see below).

If you are an umbrella company contractor, you will probably already be covered by a comprehensive business insurance policy. Check with your umbrella scheme provider if you are unsure.

EL insurance and IR35

Many contractors do opt to take out EL cover anyway, as not only can this provide peace of mind, and can also provide another pointer towards 'self employed' status, as per the IR35 rules.

In order to have a genuine 'right of substitution' in your contract wording, you would need to have employers' liability cover in place in order to cover any 'substitute' in the event that you were unable to fulfil the terms of your contract.

How do I get a quote?

You can obtain an employers liability, public liability, and professional indemnity insurance quote via our insurance partners; Hiscox and Simply Business.