When new companies need employers' liability insurance

Employers' liability is one of the few covers a business is legally required to buy, which makes it one of the easiest conversations a broker can have with a new company. They need it. They often don't know they need it. And the fines for going without are steep enough to get their attention.

The rules, in plain English

From GOV.UK's guidance:

• A business needs employers' liability insurance as soon as it becomes an employer.
• The policy has to be from an authorised insurer and cover at least £5 million.
• A business can be fined £2,500 for every day it isn't properly insured.
• It can be fined £1,000 for not displaying the certificate, which can be shown electronically if staff can get to it easily.

"Employee" is wider than people expect. Casual staff, part-timers and some labour-only subcontractors can count, depending on how the work is controlled. That's a conversation worth having with a new building firm before it hires anyone for its first job.

Who doesn't need it

The main exemptions are businesses that only employ close family members, and businesses whose only employees are based outside England, Scotland and Wales. A company whose only employee is a director owning half or more of the shares is usually exempt too.

That last one matters, because a lot of new companies are exactly that: one director, one share, no staff yet. They don't need employers' liability today. They will the week they take someone on, and that's a good reason to stay in touch rather than give up after the first call.

Why new companies are the best time to call

Most businesses buy their first commercial policies in a hurry. A builder lands a contract and the main contractor asks for certificates. A café is a week from opening and the landlord wants proof of cover. A security firm can't start a site without employers' and public liability in place.

If you're the broker who called the week the company was formed, you're the obvious person to ring when that moment comes. If you're not, they'll buy whatever comes up first online, and it'll be harder to move them at renewal.

What cover each sector needs first

Public liability isn't compulsory, but in practice most trades and venues can't work without it. Here's roughly where each kind of new company starts:

This is a starting point, not advice. What each business actually needs depends on its activities, contracts and premises.

Finding them, and what to say

Every new company is on the Companies House register the day it's formed, with its SIC codes (a rough description of what it does), registered office and directors. That's enough to work out who's likely to need what. A new company with SIC 43910 (roofing) is a very different lead from one with 62020 (IT consultancy).

When you get in touch, keep it short and specific:

• Name the cover they're likely to need first, and why.
• Mention a real trigger: contracts, landlords, the first hire.
• Offer something easy, like a same-day certificate, a quick review of a contract's insurance clause, or a combined policy for their trade.

Remember that what you send is still a financial promotion under your own FCA permissions, so the usual rules about fair, clear and not misleading apply.

Doing it at scale

Going through the register by hand works for a handful of postcodes. If you want every new company in your area each morning, sorted by the cover it's likely to need and with the director named, that's what our insurance lens does. Shells and holding companies are removed first, so your team only calls businesses that will actually trade.