Do Landlords Need Employers' Liability Insurance?

What is Employers' Liability Insurance?

Employers' liability insurance protects businesses and individuals against claims made by employees who suffer injury, illness, or death as a result of their work. It is one of the few forms of insurance that is compulsory under UK law — specifically the Employers' Liability (Compulsory Insurance) Act 1969 — and failure to hold a valid policy when required is a criminal offence.

For most commercial businesses, the requirement is straightforward. For landlords, however, the position is more nuanced. Whether a landlord needs employers' liability insurance depends on whether they employ anyone in connection with their property activities — and the definition of "employee" is broader than many landlords assume.

When is Employers' Liability Insurance Legally Required?

Under the Employers' Liability (Compulsory Insurance) Act 1969, any employer carrying on business in Great Britain must maintain employers' liability insurance with an authorised insurer. The minimum level of cover required is £5 million, though most policies provide £10 million as standard.

The key question for landlords is whether they are acting as an employer. This is not limited to formal employment contracts. HMRC and the Health and Safety Executive (HSE) apply a broader test: if you direct and control how someone carries out work for you, they may be classified as a worker or employee for the purposes of this legislation, even if they are nominally self-employed.

Landlords who engage workers on a regular, directed basis — for example, a full-time caretaker, a resident manager, or a maintenance operative who works exclusively for them — are likely to be employers for the purposes of the Act and will require employers' liability insurance.

Common Landlord Scenarios

The following table sets out the most common situations landlords encounter and the likely employers' liability position for each:

The scenarios above are general guidance only. Employment status is a legal question that depends on the specific facts of each arrangement. Landlords who are uncertain about their position should seek independent legal or HR advice.

What Does Employers' Liability Insurance Cover?

Employers' liability insurance covers the cost of compensation claims and legal expenses arising from employee injury, illness, or death caused by their work. This includes:

• Compensation awarded to an injured employee
• Legal defence costs
• Medical expenses in some cases
• Claims arising from work-related illness or disease
• Claims brought after employment has ended (latent disease claims)

It is important to note that employers' liability insurance does not cover claims from members of the public — that is the role of public liability insurance, which landlords should also hold as part of a comprehensive property owners policy. The two covers work in conjunction: employers' liability protects your workers; public liability protects third parties.

Penalties for Non-Compliance

The consequences of failing to hold employers' liability insurance when legally required are significant. The HSE enforces the Employers' Liability (Compulsory Insurance) Act 1969 and has the power to impose fines of up to £2,500 per day for each day a business operates without valid cover. In addition, failure to display the certificate of insurance (or make it available electronically) can result in a fine of up to £1,000.

Beyond the regulatory penalties, operating without employers' liability insurance exposes a landlord to the full cost of any compensation claim personally. A serious injury claim can run to hundreds of thousands of pounds — a risk that no property business should carry uninsured.

Exemptions

The Employers' Liability (Compulsory Insurance) Act 1969 includes a limited number of exemptions. The most relevant for landlords are:

• Sole traders with no employees
• Partnerships where all partners are close family members and no other employees are engaged
• Companies where the sole employee is also the sole director and owns more than 50% of the share capital
• Employees who are close family members of the employer (in certain circumstances)

These exemptions are narrow and should not be relied upon without taking specific advice. The HSE guidance on employment status and exemptions is available on the HSE website and should be reviewed in conjunction with any relevant HMRC employment status determination.

How to Arrange Cover

Employers' liability insurance for landlords is typically arranged as part of a broader property owners insurance policy or a commercial combined policy, rather than as a standalone product. A specialist broker can structure a policy that includes buildings insurance, property owners liability, employers' liability, and loss of rent cover within a single, coherent package — ensuring there are no gaps between sections and that the underwriting reflects the specific nature of your property portfolio.

When arranging cover, you will need to provide details of the number of employees, their roles, the nature of the work they carry out, and your annual wage roll. The insurer will use this information to assess the risk and set the premium. For most small landlord portfolios with one or two employees, the additional cost of employers' liability cover within a property owners policy is modest relative to the legal and financial exposure it protects against.