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What is Employers Liability Insurance?
Workers compensation and employers liability insurance make up the two components of
the same coverage in most states and are typically contained within one policy
(commonly referred to as workers compensation).
Workers compensation is one component of the policy and it covers the medical and
indemnity costs associated with a claim. There is no limit to the dollar amount of
coverage provided for this portion. Coverage under workers comp includes:
Separate from the workers compensation component, employers liability provides
protection for the business against lawsuits involving employees who are injured or
suffer an occupational illness. These lawsuits typically come from the employee,
family relatives, and even other 3rd parties. They are typically based on
negligence. Employers liability does not replace Employment Practices Liability
Insurance as it won't cover claims such as discrimination or harassment.
Think of employers liability coverage as similar to your general liability coverage.
While general liability covers a business from 3rd party claims such as customer
injuries or negligence, it does not provide coverage for employee-related
negligence. Employers liability fills the gap by responding to employee claims.
If an employee files a suit against a covered business, employers liability can
cover the following costs up to the limits of coverage:
Workers compensation and employers liability will typically respond to an
employee-related claim unless the policy specifically excludes coverage for the
event type. Here are the most common causes of employers liability lawsuits:
Loss of Consortium
This type of lawsuit is generally filed by a spouse and is based on the claim that
the injured employee is no longer able to engage in marital relations due to the
injury. Permanent nerve damage could be cited as the cause, for example.
Third Party Over Actions
Third party over action claims happen when a 3rd party sues your business for
contributory negligence after your employee files a lawsuit against them.
manufacturers and contractors provide good examples of this type of suit. Imagine
and employee injured while using a machine or equipment for a job and sustains an
injury. while collecting workers compensation benefits, they file a lawsuit against
the manufacturer of the equipment. The manufacturer, in turn, sues your business for
contributory negligence for not maintaining the equipment properly.
These type of claims typically come from family members and spouses who claim
bodily/psychological injuries as a consequence of the employee's injury. An example
of a consequential injury would be a spouse who suffers a stroke while the employee
was in the hospital.
Injured Workers Rejects Workers Compensation
Some states allow injured employees to reject coverage and file suit for damages due
Dual Capacity Claims
These claims are specific to manufactures and generally happen when the employer is
also the manufacturer of the product that caused the employee injury.
Employer liability insurance does contain certain policy exclusions and will not
provide coverage for some types of employee claims. Some of these policy exclusions
Employers liability limits are set within the policy and employers have the ability
to increase these limits of coverage. Each state sets the minimum required limits
for coverage in their state. Basic statutory limits in most states are:
Most private workers insurance companies offer easy options to increase these limits
of coverage with options such as $500k/$500k/$500k or $1mil/$1mil/$1mil. Increasing
employers liability limits typically costs business owners an additional 2%-3% of
premium. Limits can often be increase to a maximum of $5 million for each part of
coverage. An Umbrella policy may also provide additional coverage over employers
Workers compensation coverage in monopolistic states does not provide coverage for
employers liability insurance. Employers who operate in these states should consider
purchasing employers liability coverage under their general liability policies. This
coverage is also know as Stop-Gap coverage and is added to general liability
coverage by endorsement.
There are four states that operate their own workers compensation Funds:
Workers compensation insurance is managed separately by each state in the
U.S. Our agency helps business owners find more affordable employers
liability insurance by shopping coverage with insurance companies that offer
lower rates and more policy credits for coverage.
Private insurance companies have different appetites and underwriting
guidelines depending on their performance in each state. Workers comp rates
and pricing can vary tremendously from one carrier to the next. We want to
help you find the very best deal on coverage in your state.