CII London Market 1 (LM1) – Insurance Essentials Practice Test

Employers' liability insurance is a legal requirement for companies in the UK that employ staff. This type of insurance provides coverage for the business in cases where employees suffer injuries or illnesses related to their work. It is essential for any firm that has employees, as it protects both the employer and the employee by ensuring that compensation can be provided for workplace-related injuries.

Given that the firm in the question has five employees, it falls within the scope of the law, which mandates that employers must have a minimum level of employers' liability insurance. This coverage not only helps comply with legal obligations but also safeguards the company’s financial stability in the event of claims. The other types of insurance listed may be beneficial or required for different aspects of business operations, but they are not compulsory in the same way that employers' liability insurance is for a company with employees.