Employers Liability insurance covers claims made against you by employees or subcontractors (labour-only) of your company.
If you are a typical ‘one man band’ company with only yourself in the company (and you hold at least 50% of the shares), the likelihood of any claims is clearly negligible. However, many contractors do still hold the policy because it is commonly required by recruitment agencies and end clients in contractual agreements. It also helps to show that you are operating a ‘genuine business’ for IR35 purposes.
It is important to note that if you do have any employees, even if it is a spouse, the policy is a legal requirement.
The legal minimum level of cover for most companies is £5m, but the vast majority of insurers will provide a £10m policy as standard.
Most providers will only sell Employers Liability alongside Public Liability. This is because you will need Public Liability to cover claims made against the company due to third party injury/death or third party property damage by you or your employees. Qdos Contractor have a £1m Public and Employers Liability (£10m Employers Liability) for IT contractors for just £110 pa (correct at time of writing – last updated 21/09/2017)