Does the employer or their insurer pay injury compensation?
Updated: 3 Oct, 2025 By Chris Salmon
If you have been injured at work and decide to make a work injury compensation claim, you may worry about the financial impact on your employer. In practice, most claims are paid by the employer’s employers’ liability insurer, not directly by the employer.
Employers’ liability insurance
Under the Employers’ Liability (Compulsory Insurance) Act 1969, almost all UK employers are legally required to have employers’ liability (EL) insurance. This insurance covers the cost of compensation when an employee is injured or made ill in the course of their work.
Employers’ liability policies must provide a minimum of £5 million in cover, although most employers have £10 million. The policy applies whether the accident happened on company premises or elsewhere, and it also covers overseas trips if the employee is normally based in the UK.
If you work for a UK company but are permanently based abroad, the Act does not require cover. Even so, most reputable companies will arrange local insurance or extend their UK policy to provide protection.
Can insurers refuse to pay compensation?
No. The law prevents insurers from adding policy conditions that could deprive an injured worker of compensation. This means an insurer cannot refuse to pay if, for example:
- Your employer failed to keep adequate records
- You did not follow a workplace procedure or instruction
- Your injuries were caused by another colleague
As long as the accident arose from your work, the insurer is responsible for paying compensation.
Compensation is paid by the employer's insurer, not from an emplyer's pocket. Reporting the accident and keeping evidence helps the insurer deal with your claim faster.
John Kushnick
Legal Operations Director (NAL)
Can deductions or excess be taken from my compensation?
No. You will receive the full compensation amount awarded by the court or agreed in settlement. Insurers cannot deduct excess payments or reduce the settlement figure.
What if my employer failed to carry out risk assessments?
Employers are legally required to complete risk assessments under UK health and safety law, including for employees working from home. If your employer failed to carry out a risk assessment, the insurer must still pay compensation. However, the insurer may later attempt to recover costs from the employer directly.
Are any employers exempt from having insurance?
Almost all UK employers must hold employers’ liability insurance, but there are limited exceptions. Exempt employers include:
- Family businesses that only employ close family members
- Sole traders who employ no staff, or companies where the owner holds more than 50% of shares
- Government departments and local authorities
- Public health services such as the NHS and health trusts
Outside of these exemptions, any employer operating without insurance is breaking the law.
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?
Read more: Work accident claim guide
One quick call can give you clarity and confidence about your options after a work accident. A specialist advisor will:
- Give free, confidential and impartial advice
- Explain clearly how No Win, No Fee works
- Connect you with the right solicitor for your case
You're under no pressure to claim. We'll get you the right advice, when you need it.
About the author
Chris Salmon is a legal commentator and co-founder of Quittance Legal Services. He has written extensively about workplace accidents, employment rights and the claims process. Chris's work has been cited in national media and he regularly contributes practical guidance to help injured workers understand their options.
Last reviewed October 2025 by Chris Salmon
External references
- Employers’ Liability (Compulsory Insurance) Act 1969 - outlines the legal requirement for employers to have liability insurance to cover employee injury compensation.
- HSE: Employers’ Liability (Compulsory Insurance) Act 1969 - provides guidance on employers’ obligations to hold insurance for workplace injury claims.
- GOV.UK: Compensation after an accident or injury - explains the claims process, including how insurers typically handle compensation payments.
- Acas: Health and safety - details employer responsibilities for workplace safety, relevant to understanding liability in injury claims.