Do we need employer's liability insurance?

[miho]

Hi, my wife and I are shareholders and directors of a limited company with no other employees and are uncertain whether we need to have employer's liability insurance in place (we both own 50% of the shares). The guidance on the government's website would seem to suggest that the company should have EL insurance in place as we are both providing services for it although neither of us have an employment contract in place. I have also seen a post on another forum indicating an insurer would refuse to pay out for an EL claim in our situation even if a policy was in place as it would be a conflict of interest. Is anyone able to give us some guidance on this please?

[islandgirl]

Our insurer insists on it and we are in the same boat...

[des8]

The Employers Liability (Compulsory Insurance) Act 1969 applied to all limited companies when it was first brought into law.
It was not until 2004(?) that an amendment by Statutory instrument added to exemptions limited companies with only one employee who owned at least 50%

If an insurer declined to pay a valid EL claim on the basis of conflict of interest, that insurer should not be underwriting that class of business and needs to be reported to ABI, FCA and PRA

You may not have a written contract of employment with your company, but almost certainly you will be deemed to have an implied contract

[islandgirl]

There is little chance of a claim as in my case directors are married - we are unlikely to run off to Bolivia with the contents of the bank account. But the insurer says as a Ltd company we have to have it so we do.

[miho]

Thanks for your replies. It looks like we are going to have to pay for EL insurance even though we will never claim on it!