Employers’ liability insurance covers claims from your own employees who are injured or made ill through their work; public liability insurance covers claims from members of the public and other third parties. Employers’ liability is a legal requirement for most UK businesses that employ staff, under the Employers’ Liability (Compulsory Insurance) Act 1969. Public liability is not compulsory in law, but is often required by contract and is the cover most businesses buy first.
The two are frequently sold together and easily confused, but they answer different risks and only one is required by law. Getting the distinction right matters both for compliance and for making sure a claim is actually covered.
The core difference: who is bringing the claim?
The dividing line is the claimant. If the injured person works for you, it is an employers’ liability matter. If they are a customer, a visitor, a passer-by or another business, it is a public liability matter. A cleaner who slips in your office is an employers’ liability claim; a customer who slips in your reception is a public liability claim.
When is employers’ liability insurance compulsory?
Under the Employers’ Liability (Compulsory Insurance) Act 1969, most employers must hold at least £5 million of employers’ liability cover, insuring against injury or illness to employees arising out of their employment. Failing to hold valid cover can be penalised at up to £2,500 for each day you are uninsured. A narrow set of employers is exempt, such as some family businesses employing only close relatives, and most public bodies. Our employers’ liability requirements guide covers the thresholds in full.
Is public liability insurance a legal requirement?
No. There is no law compelling public liability cover. In practice, though, many businesses cannot operate without it: commercial landlords, event organisers, local authorities and larger clients routinely require it in contracts, and any business whose staff or premises come into contact with the public carries the exposure. It is voluntary in law but close to essential in practice.
Do I need both?
Most businesses with employees need both. Employers’ liability is required the moment you take on staff; public liability responds to the separate risk of injuring a third party or damaging their property. They do not overlap: a claim by an employee is not covered by public liability, and a claim by a customer is not covered by employers’ liability. A gap in either leaves a different part of your exposure open.
What about professional mistakes?
Neither cover responds to a claim that you gave negligent professional advice or a substandard service; that is the job of professional indemnity insurance. If your business is advice-led as well as physical, see our guide to professional indemnity vs public liability.
Getting the combination right
Most businesses need a combination, and the right mix depends on who you employ, who you deal with and what your contracts demand. A broker can make sure the compulsory cover is in place and the voluntary covers actually match your exposures. To review your commercial cover, get a quote or speak to the team.