Which insurance is compulsory in the UK?

In the UK some types of insurance are legally compulsory for everyone.  Read on to learn more about what is required and what is not.

When do I need Insurance?

The purpose of taking out any insurance policy is to compensate you in the event of a loss so that you are in the same position financially after the loss as you were before it.   Insurance is not intended to make you better off in any way.

  • You MUST have insurance where it is required by law;
  • You SHOULD have insurance if an event might occur that would create a loss that you could not afford to fund yourself.
  • In all other cases, happy days!

But some insurance is compulsory?

Yes.  There are currently 2 types of insurance cover that are required by law in the UK.

1. Motor Insurance

All drivers are required by law (under the Road Traffic Act of 1930) to have in force an insurance policy to cover their liability for bodily injury to or damage to third party property which arises from the use of a motor vehicle.

The cover does not have to be anything other than Third Party only although many policies are now arranged on a Third Party Fire and Theft and Fully Comprehensive basis.

2. Employers’ Liability

Employers Liability Insurance is required by law (under the Compulsory Insurance Act 1969) if you run a business to provide cover in the event that one of your employees is injured or becomes ill as a result of working for you.

Are there others?

No.  Many people believe that there are other types of legally mandatory insurance since they are often heavily encouraged to take out additional covers – but it is not the case.

  • Banks will often sell Payment Protection Insurance to cover a loan that you take out with them.
  • Credit card companies will often insist that card protection in case of fraud is essential, even though consumers are already heavily indemnified by card providers and banks already.
  • Mortgage lenders will often insist on buildings insurance, life assurance and even critical illness payment protection.
  • Landlords frequently request home contents cover insurance before a new rental agreement is signed.

Although less scrupulous organisations may imply or even say outright that certain insurances are legally required it is rarely the case.  This is a very topical discussion point at the moment in the UK with awards now being given to account holders who were mis-sold this type of cover in the belief that they had to have it.

Let us know if you have experienced this yourself in the comments!

Photo by mendhak


  1. It is also a legal requirement for a horse riding school to have public liability insurance. From memory this is stated in the basic Chartered Insurance Institute IF1 exam.

  2. I have a Public Liability insurance for myself and my husband […] and i thought that i would need EL by law as we are a limited company.

    I was told that in the case of close family being the only employees of the company we wouldn’t need employers liability insurance by law. Is this true?

    1. Hi Jennifer,

      Even volunteers and helpers should be covered for EL – there does not have to be a contract in place for Liability to attach.

      I would suggest contacting your insurance advisor to discuss.


  3. My local Football Association (FA) insists that all amateur players playing in the local leagues under their duristiction must be insured. Furthermore, the insurance policy must be a specific policy they have negotiated. Annualk premium is £6,00 per player. Otherwise, you are not allowed to particiapte in any organised competitive football.
    Can this FA impose such a condition.

    1. Hi Joe,

      There would be no legal requirement for you to have this cover.

      Having said that any association can make it a requirement of competing in their competitions – if you do not have it then you cannot play – this is just a requirement they have, there is no legal basis to have it.


  4. Hi I have a business loan for my ltd company. It is 5 years old and HSBC insisted they provided life insurance which is going up each year as my loan reduces. Is this correct or can I cancel the life insurance


  5. lloyds bank insisted that i take out term life cover with them as benificiaries to cover a £50k loan when buying my house.was this legal or do i have a case for redress against them?

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