Employer's Liability Insurance

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Employer's Liability & Workers Compensation

One misconception some employers may have is that Workers Compensation only protects injured employees. The more commonly-referenced first part of a Worker’s Compensation policy is coverage for worker medical expenses and wage loss. The second part of a Workers Compensation policy is Employer’s Liability insurance, which is designed to cover employers against lawsuits from injured employees and their dependents.

What Does Employer’s Liability Insurance Cover?

Employer’s Liability insurance plays an integral role in the overall Workers Compensation policy, protecting employers from a variety of different lawsuits related to workplace injuries. In particular, Employer’s Liability insurance may be seen as a significant boon to employers, as it is designed to help mitigate their liability risk should employees sue for injuries that were not covered in the first part of the Workers Compensation policy.

When workers suffer injuries on the job, the first part of the Workers Compensation policy is designed to cover their medical expenses and lost wages. However, there are times when those employees may feel that the compensation they received was not adequate, or may believe that other injuries or illnesses were not properly considered when a judgment on their compensation was determined. Additionally, if an employee feels employer negligence played a role in their injury, they may choose to sue for extra compensation related to that. While the lawsuits may be legitimate, once a decision is given based on the original claim, employers are then given protection from such additional claims under Workers Compensation by the Employer’s Liability portion of the coverage.

Third Party Claims

Additionally, Employer’s Liability insurance will help protect employers against third party claims. When an employee sues a third party in relation to workplace injuries, that third party may try to recoup their losses by suing the employee’s business. And in states where laws allow an employee’s family to sue the business for loss of consortium, Employer’s Liability insurance will also help to cover the employer's legal expenses.

Frivolous & False Claims

An area of particular interest to employers is often protection against frivolous Workers Compensation claims. Employer’s Liability insurance is also designed to help reduce the risk of such claims, covering employers’ legal fees should they arise.

Business owners should understand that false claims do occur, sometimes even from workers who have received compensation for their medical expenses and lost wages. Employer’s Liability insurance is important to help ensure that employers are not taken advantage of by employees or other parties that may try to pursue greater compensation than was originally determined to be appropriate.

Employer’s Liability Coverage in Monopolistic States

Unfortunately, Employer’s Liability insurance is not always included within Workers Compensation policies in monopolistic states. In these states, employers must purchase their Workers Compensation directly from a state fund set up for this purpose. Monopolistic states include North Dakota, Ohio, Washington, and Wyoming. This gap in coverage can be avoided through the purchase of a Stop Gap Endorsement to your Workers Compensation policy.

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