Employers liability insurance is a compulsory insurance policy. This needs to be taken out if the business has employees of any kind.
This insurance is used to protect the business if a current or former employee were to claim compensation against the business. This will be for for injury or illness caused within the workplace. This insurance then gives you at least a minimum level of cover for any claims. This will give the business an adequate level of cover should compensation be claimed. It will also ensure you are covered for any legal costs that arise as a result of the claim.
Even if you only employ temporary workers such a contractors or general short term staff you will still normally need the insurance. This is to in order to comply with the law. However, you are exempt from taking out the insurance if you only employ close family members or have no employees.
The premiums are normally based on a number of factors. These include the nature of the business, if you have any previous claims and also the amount of employees.
If the business is not insured correctly, it can lead to a fine of up to £2500 for every day that the business is not covered.