Does the employer or their insurer pay injury compensation?

Updated: October 9, 2020

If you have been injured at work and you decide to make a compensation claim, you may be concerned about the financial impact it could have on your employer. However, most work injury claims are settled by the employer's employment liability insurer.

Employers’ liability insurance

Under the Employers’ Liability (Compulsory Insurance) Act 1969, the majority of UK employers are required to have ‘employers' liability insurance’. This insurance will pay compensation to an employee injured or made ill through the course of their work.

Employers' liability insurance policies must cover the cost of compensation paid to employees injured on or off company premises. The minimum legal cover an employer must have is £5m - but £10m is more common. The policy will also cover injuries sustained on overseas trips if you are usually based in the UK.

If you work for a UK company but are based permanently abroad, the Act does not require you to be covered. However, most companies will have cover in place, either as part of their UK policy or policy taken out in the country in which you are based.

Could an insurance company 'wriggle out of' paying compensation?

Unlike certain types of insurance policy, the Act prevents employers liability insurers from imposing conditions that could prevent an injured employee from being compensated. As such an employer's insurer cannot refuse to pay compensation if, for example:

  • Your employer did not keep suitable records
  • You did something that your employer asked you not to or you failed to follow company procedure
  • You failed to do something that your employer asked you to do
  • Your injuries resulted from a colleague's actions or inactions

Could the insurer make any deductions or charge me an excess?

No. Your employer, or former or employer, must pay the full amount of any compensation awarded by a court or the amount you agree with your employee in an out of court settlement.

Risk Assessments

Health and safety legislation requires your employer to carry out a full risk assessment of the safety and suitability of your working environment - even if you are working from home.

If your employer has not carried out a risk assessment, the insurer must still pay compensation. However, the insurer may subsequently pursue the employer and attempt to recover the compensation amount from the employer.

Is my employer exempt?

All UK employers must hold employer’s liability insurance unless they are specifically excluded by the Act. Excluded employers include:

  • Family businesses - where you are a small company only employing family embers
  • Sole trader - replying the oner only and the owner owns more than 50% of the company
  • National or local government bodies or authorities
  • Public health services (e.g. the NHS) or health trusts
Have you been injured at work?

If you have been injured at work in the last 3 years, you may be able to claim financial compensation.

Find out more about making a work accident claim:

  • Do you qualify?
  • How much compensation could you get?
  • How does No Win, No Fee work?
Work accident claim guide