Public liability and employers’ liability insurance are both designed to protect businesses against claims, but they cover different people and different types of risk. Understanding the difference is important for businesses of all sizes, particularly small businesses taking on their first employee.
What Is Public Liability Insurance?
Public liability insurance can cover claims made against your business by customers, visitors, members of the public, or other businesses. These claims may arise if someone is injured or their property is accidentally damaged as a result of your business activities.
For example, a customer could slip on a wet floor at your premises and suffer an injury. A tradesperson could accidentally damage a customer’s property while carrying out work at their home. A member of the public could also be injured by something connected with work being carried out at a property.
Public liability insurance is generally not a legal requirement for every business, although certain contracts, landlords, professional bodies or clients may require businesses to have it.
What Is Employers’ Liability Insurance?
Employers’ liability insurance is different because it relates to your employees. It can help meet the cost of compensation where an employee is injured or becomes ill because of the work they do for your business.
For example, an employee could be injured while using workplace equipment, suffer an injury following an accident at work, or develop a work-related illness.
Unlike public liability insurance, Employers’ Liability insurance is compulsory for most employers in Great Britain. Businesses generally need to arrange cover as soon as they become an employer, with a minimum level of £5 million from an authorised insurer.
Do I Need Employers’ Liability Insurance for One Employee?
Having only one employee does not usually mean you are exempt. Most employers need Employers’ Liability insurance even when they employ just one person.
There are some specific exemptions. For example, certain family members and particular business structures may not require cover, so it is important to consider the circumstances of your business rather than assuming that having a single employee automatically means you are exempt.
If you are required to have Employers’ Liability insurance and do not have appropriate cover, you could face enforcement action and financial penalties. GOV.UK states that employers can be fined £2,500 for each day they are not properly insured.
Public Liability and Employers’ Liability Are Not the Same
The simplest way to remember the difference is to consider who is making the claim.
Public liability generally relates to claims from people outside your workforce, such as customers, visitors or members of the public.
Employers’ liability relates to claims from employees who suffer an injury or illness connected with their employment.
Depending on your business activities and circumstances, you may need both types of cover. The appropriate level and scope of insurance will depend on the risks associated with your business, the people you employ and the work you undertake.
If you are unsure which business insurance you need, Ashburnham Insurance can help you consider the risks associated with your business and the cover available.