When applying for insurance with Qdos the number of people for cover should represent the total number of employees, this would include working directors, employees and labour only subcontractors.

In the example provided with a company employing one director and their spouse (performing administrative tasks), this would still be the case. This would increase the premium and the driver for this is largely the Employers Liability risk as an employer’s duty of care to their employees, regarding providing a safe working environment etc., is not excused by virtue of the employee being the directors spouse.

Whether the premium would alter following an increase to the number of employees will depend on the provider and the policy being purchased. The number of employees is a longstanding exposure measure in Employers & Public Liability Insurance i.e. the premium increasing with an increase in the number of employees declared, however our Professional Indemnity insurance has turnover as an exposure measure and as such would not increase in price from 1 to 2 employees declared (assuming turnover remains constant).

There is however a distinction to be made between what information needs to be disclosed/what selections are made when applying for a policy (i.e. the applicants duty to make a ‘fair presentation of the risk’ as per the Insurance Act) and the legal requirement to carry Employers Liability Insurance. Essentially the requirement applies to all businesses with employees unless they are ‘exempt’ from holding the cover, these exemptions are set out in the act and should be reviewed before making a policy decision, but the most pertinent to this discussion are:

• The family business exemption – businesses would not be required to carry Employers Liability insurance if all employees are closely related. This is sometimes quoted as a reason a contractor employing only their spouse would not look to carry Employers Liability insurance, however this exemption does not apply to businesses incorporated as limited companies.

• Companies employing only their owner where that employee also owns 50% or more of the share capital. This means that for businesses who have 2 employees (the director and a spouse/admin employee for example), they would be required to carry Employers Liability Insurance. If there were 2 shareholders with 50% shareholding each and only one was employed by the business i.e. not a pure shareholder, the exemption would apply.

Apologies the above position was not accurately conveyed via our online chat system, we would be more than happy to discuss further if required.