Public liability vs employers' liability insurance: what's the difference?

Reviewed by Matthew Bartlett, Director, Apex Insurance Brokers Limited · Last reviewed 2026-08-05

These two covers are frequently bundled together and easily confused, but they protect against completely different risks. The dividing line is simple: who is making the claim against you. If it's someone outside your business, that's public liability. If it's someone who works for you, that's employers' liability.

What public liability insurance covers

Public liability (PL) insurance responds when a third party suffers injury, or their property is damaged, as a result of your business activities — and they hold you responsible. It typically covers the compensation you're legally liable to pay, plus the legal costs of defending the claim.

Common examples include a customer slipping on a wet floor in your premises, a delivery you make damaging a client's property, or a tool dropped from scaffolding injuring a passer-by. Cover is usually arranged in generic limits such as £1m, £2m or £5m, with £5m (and sometimes higher) often required to work on local authority or main-contractor sites.

Public liability is not a legal requirement, but for many trades — builders, tradespeople, retailers, hospitality, event organisers — it is difficult to operate or win contracts without it. Clients and site principals routinely make it a condition of engagement.

What employers' liability insurance covers

Employers' liability (EL) insurance covers compensation and legal costs when an employee is injured or becomes ill because of the work they do for you, and brings a claim against your business. This might be an accident with machinery, a long-term condition caused by exposure at work, or an injury from a fall on site.

Crucially, EL is a statutory requirement. Under the Employers' Liability (Compulsory Insurance) Act 1969, most UK employers must hold employers' liability insurance covering at least £5 million from an authorised insurer. In practice, most policies are issued with a £10m limit as standard. You must also display or make available your certificate of insurance to employees.

The Health and Safety Executive (HSE) enforces the requirement, and penalties for not holding valid cover can be significant — historically fined per day of non-compliance. It applies whether staff are full-time, part-time, temporary or on short contracts.

Public liability vs employers' liability at a glance

Who needs each cover

You almost certainly need employers' liability if you employ anyone — permanent, temporary, casual or under an apprenticeship. There are limited exemptions, such as some family businesses employing only close relatives, and companies with a single employee who also owns the majority of shares. If in doubt, check with your broker rather than assume you're exempt.

You should seriously consider public liability if your work brings you into contact with the public, clients or their property — whether that's visitors to your premises, working on customer sites, or attending events and markets. Many contracts and marketplaces won't let you trade without evidence of it.

Plenty of businesses need both. A building firm with employees on customer sites, for example, needs EL to protect its workers and PL to protect against damage to the client's property or injury to bystanders. It's common to arrange both under a single combined liability or tradesman policy, alongside professional indemnity where advice or design is involved.

Where the two can overlap — and where they don't

A single incident can occasionally raise questions about which policy responds. If a subcontractor is injured, whether they count as an "employee" for EL purposes depends on the working relationship, not just the label on the contract. Labour-only subcontractors are often treated as employees for insurance purposes, while bona fide subcontractors may fall under public liability. Getting your policy set up to reflect how you actually engage people is important — a broker can make sure there are no gaps between the two.

Neither cover extends to poor professional advice, design errors or financial loss caused by your work — that's the role of professional indemnity insurance. And damage to your own tools, stock or premises needs separate property cover.

Common questions

Can I have one without the other?

Yes. A sole trader with no employees may hold public liability alone. But if you take on staff, employers' liability is a legal requirement in most cases, regardless of whether you also carry public liability.

Does employers' liability cover the public?

No. Employers' liability responds only to claims from your employees. Injuries or property damage affecting clients or members of the public fall under public liability.

What limit of employers' liability do I need?

The legal minimum is £5 million, but most insurers issue policies with a £10 million limit as standard, which is what many clients and contracts expect to see.

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This guide is general information, not advice on a specific policy or a substitute for your policy wording.