Compulsory insurance in the UK
Two insurances are required by law in the UK: employers' liability cover of at least £5 million for every employer with staff, and motor insurance for every vehicle used on a road. Both come from authorised insurers.
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Most business decisions are a matter of judgement; these two are not, because the penalties begin on the first day of non-compliance. The wider finance picture is at UK financial solutions.
01
Which insurances are compulsory in the UK?
GOV.UK names two insurances required by law: employers' liability cover, taken from the moment someone becomes an employer, and motor insurance for any vehicle used on a road or in a public place. Everything else is a commercial decision.
Everything else — premises, professional indemnity, cyber — is a commercial decision. These two are not, and the enforcement for both begins immediately rather than at a renewal date.
02
What are the conditions on employers' liability insurance?
Employers' liability insurance is taken from an authorised insurer with cover of at least £5 million and takes effect the moment someone becomes an employer. A penalty of £2,500 applies for each day spent uninsured.
03
Who is exempt from employers' liability insurance?
GOV.UK names two exemptions: an employer whose only employee is a family member on the published list, and an employer whose only employee is based outside England, Scotland and Wales. Everyone else is covered by the requirement.
The family exemption is narrow and reads against a published list of relationships rather than against the ordinary meaning of family. A limited company employing its own director is not exempt on that basis alone.
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04
What are the penalties for driving without insurance?
Police issue a fixed penalty of £300 and six penalty points to a driver without insurance. Where the case reaches court, an unlimited fine and a driving ban are available, and the vehicle can be seized.
A vehicle kept off the road must be declared off-road rather than simply left uninsured, because the requirement attaches to the vehicle being kept as well as to it being driven.
05
What happens to a claim if the insurer fails?
Where an insurer becomes insolvent, the Financial Services Compensation Scheme pays the claim. On compulsory insurances such as employers' liability and motor, the FSCS covers the whole of a valid claim rather than a proportion of it.
That protection depends on the insurer having been authorised. An unauthorised insurer leaves nothing behind it, which is the practical reason authorisation is checked before a policy is bought.
06
Where does an insurance complaint go?
A complaint goes first to the insurance firm in writing. The firm's deadline for a final response is eight weeks on most complaints and 15 days on those about fraud and payment services, after which the Financial Ombudsman Service takes it.
Insurance and investment services are provided only by firms authorised by the Financial Conduct Authority, and authorisation is verified on the Financial Services Register before any engagement.
Sources
- GOV.UK — Employers' liability insurance of at least £5 million is required from an authorised insurer as soon as a business becomes an employer, with a penalty of £2,500 for each uninsured day. — 26 August 2026
- GOV.UK — Driving without insurance carries a £300 fixed penalty and six penalty points, with an unlimited fine and a driving ban available in court. — 26 August 2026
- FSCS — Where an insurer fails, the Financial Services Compensation Scheme covers the whole of a valid claim on compulsory insurances including employers' liability and motor. — 26 August 2026
- Financial Ombudsman Service — A firm has eight weeks to give a final response to most complaints and 15 days for complaints about fraud and payment services. — 26 August 2026
