Do courier companies need employers' liability insurance?
Yes, if they have anyone working for them with the employment status of employee. It's required by law as soon as a business takes on its first employee, whatever the size of the business.
Yesterday we looked at whether a courier driver needs a DBS check before certain sites will let them through the door. Today’s question sits a step earlier than that, back at the moment a courier business takes on its first employed driver rather than working entirely through self-employed subcontractors, because that’s the point at which a separate legal duty kicks in: employers’ liability insurance.
What Is Employers’ Liability Insurance, and How Is It Different From Van Insurance?
Employers’ liability insurance covers compensation claims from someone who works for you, if they’re injured or become ill because of the work they do for your business. That’s a different policy doing a different job to the cover we’ve written about before. Hire and reward insurance covers the van when it’s used to carry other people’s goods for payment, and goods in transit insurance covers the consignment on board. Employers’ liability covers neither the vehicle nor the parcel. It covers the driver, and it’s the one policy on this list that isn’t optional once you employ someone.
Is Employers’ Liability Insurance a Legal Requirement for Courier Companies?
Yes. The Employers’ Liability (Compulsory Insurance) Act 1969 requires any business with employees to hold it, and the duty starts as soon as the first employee is taken on, not once the business reaches a certain size or turnover. It’s enforced by the Health and Safety Executive, which can and does check that a policy is in place with an authorised insurer, and that the level of cover meets the legal minimum. Public liability insurance is often confused with it, but the two are separate: public liability covers claims from customers or members of the public, while employers’ liability is the only one of the two that’s compulsory.
How Much Cover Does the Law Require, and What Happens Without It?
The minimum is £5 million, from an insurer authorised by the Financial Conduct Authority, and cover can be split across more than one policy as long as the combined total meets that figure. In practice most insurers offer £10 million or more as standard. Run a courier business without it and the fine is £2,500 for every day the business is uninsured, on top of a separate £1,000 fine for failing to display the certificate of insurance or refusing to show it to an HSE inspector when asked. Neither fine needs an accident to have happened first. Simply operating without the right policy is enough to trigger them.
Employed Driver or Self-Employed Subcontractor: Why the Distinction Decides Who Needs Cover
A lot of same day work runs through contract courier arrangements with self-employed drivers, and genuinely self-employed subcontractors are responsible for arranging their own cover, not the firm that books them. But calling a driver self-employed for tax purposes doesn’t settle the question on its own. HSE looks at the reality of the working relationship: who controls where, when and how the work is done, who supplies the van and equipment, whether tax and National Insurance are deducted at source, and whether the driver can send a substitute if they can’t do the job themselves. Get enough of those factors pointing one way and a driver treated as self-employed for tax can still count as an employee for employers’ liability purposes. The Court of Appeal case Stuart Delivery Ltd v Augustine turned on exactly this point: a courier’s right to substitute another driver was so limited in practice that he was found to owe personal service, which made him a worker rather than a genuinely self-employed contractor. It’s a useful reminder that the label on a contract matters less than what actually happens on the road.
Displaying the Certificate: What Courier Companies Must Show Drivers and Inspectors
Once a policy is in place, the certificate of insurance has to be displayed somewhere employees can reasonably access it, at a depot or office, or since October 2008, electronically on a website or staff intranet as long as employees know where to find it. The same certificate has to be shown to an HSE inspector on request. Skipping either step carries its own £1,000 fine, separate from the £2,500 daily fine for having no cover at all, so a business can be caught out on paperwork even when the policy itself is correct.
Are There Any Exemptions for Small or Family-Run Courier Firms?
A small number apply. A business doesn’t need employers’ liability insurance to cover a close family member, such as a husband, wife, civil partner, parent, child, grandparent or sibling, or anyone based entirely outside England, Scotland and Wales. That’s it. The family exemption stops applying the moment the business is incorporated as a limited company, which catches out more courier operators than any other part of the rules, since plenty of small firms move from sole trader to limited company as they grow without revisiting their insurance.
Whether a job comes from one of our own employed drivers or a vetted subcontractor working under contract, every job we run carries the cover the law requires, so you’re never the one exposed if something goes wrong. Call our controllers on 020 4525 2039 or get a fixed quote online.
At a Glance
| Question | Short answer |
|---|---|
| Do courier companies need employers' liability insurance? | Yes, if they have anyone working for them with the employment status of employee. |
| How much employers' liability cover does a courier company need by law? | At least £5 million, from an insurer authorised by the Financial Conduct Authority. |
| What happens if a courier company doesn't have employers' liability insurance? | It can be fined £2,500 for every day it operates without it, plus a further £1,000 if it fails to display its certificate or show it… |
| Do self-employed courier drivers need to be covered by employers' liability insurance? | Not usually, because genuinely self-employed subcontractors are responsible for their own insurance. |
| Are there any exemptions from needing employers' liability insurance? | Yes, for businesses that only employ a close family member, such as a spouse, civil partner, parent or child, or someone based entirely outside England, Scotland… |
Frequently Asked Questions
Do courier companies need employers’ liability insurance?
Yes, if they have anyone working for them with the employment status of employee. It’s required by law as soon as a business takes on its first employee, whatever the size of the business.
How much employers’ liability cover does a courier company need by law?
At least £5 million, from an insurer authorised by the Financial Conduct Authority. Most insurers provide £10 million or more as standard, and cover can be split across more than one policy as long as the total meets the minimum.
What happens if a courier company doesn’t have employers’ liability insurance?
It can be fined £2,500 for every day it operates without it, plus a further £1,000 if it fails to display its certificate or show it to an HSE inspector on request.
Do self-employed courier drivers need to be covered by employers’ liability insurance?
Not usually, because genuinely self-employed subcontractors are responsible for their own insurance. But calling a driver self-employed for tax purposes doesn’t settle it. If a courier business controls how, when and where they work and they can’t send a substitute, they may still count as an employee for employers’ liability purposes.
Are there any exemptions from needing employers’ liability insurance?
Yes, for businesses that only employ a close family member, such as a spouse, civil partner, parent or child, or someone based entirely outside England, Scotland and Wales. The family exemption doesn’t apply once the business is an incorporated limited company.
Official guidance
The rules described above come from the official sources below. Regulations change, so check the current position before you rely on them.