What is Employer's Liability Insurance?
Employer's Liability Insurance helps cover claims that your negligence caused an employee's workplace injury. It is often included in Workers' Compensation Insurance to pay for lawsuit costs like lawyer's bills, court costs, and judgements or settlements when an employee sues after getting hurt at work.
“But wait,” you say, “I thought the Workers’ Comp exclusive remedy meant employees couldn't sue their employers over injuries.” In many cases, that’s true. But Workers' Comp only prevents employee lawsuits over certain kinds of damages (e.g., medical costs and lost wages). They may still be able to sue you if they think you should have been able to prevent their injury but didn't.
This is where Employer’s Liability Insurance can help. Carrying a Workers' Comp policy that includes Employer's Liability Insurance helps maximize your chances of surviving a lawsuit following an employee injury.
Note: If you live in North Dakota, Ohio, Wyoming, or Washington, your Workers' Comp Insurance is only offered by a state-run monopoly. The policies available through the state don't include Employer's Liability Insurance, so if you want that protection, you'll have to buy it separately.
When an Injury Goes Beyond Workers’ Comp
To better understand Employer’s Liability, let’s take a closer look at Workers’ Comp and what it does and doesn’t cover.
Workers’ Comp can be thought of as a kind of compromise between employees and employers that's regulated at the state level. In nearly every case where an employee is injured because of their work, Workers’ Comp steps in (if the claim is approved) to reimburse the employee for…
- Ambulance rides, hospital bills, medication, rehabilitation, and more.
- A portion of their lost wages.
- Disability payments (if applicable).
- Death benefits (if applicable).
In many cases, this is enough. An employee may settle with the insurance company for a little more or a little less, but overall, state law tries to make the process fair.
Because of the "exclusive remedy rule," you (the employer) can't be sued by your employee for additional medical damages if Workers' Comp has already reimbursed the employee for those expenses.
How Employer’s Liability Insurance Works
Despite the "exclusive remedy," your employee may be able to sue for additional benefits not covered by Workers' Comp, such as payment for pain and suffering. The catch? To do this, the worker must prove that the injury or accident was caused in part by your negligence.
When that happens, Employer’s Liability Insurance can provide funds for…
- Attorney fees.
- Court costs.
- Judgments and settlements.
Also worth noting: Negligence involving work safety is often a crime, and insurance can’t protect you from illegal actions. It’s better to take the necessary precautions and safety measures to prevent injuries and illnesses. That way, you follow the law, prevent injuries from occurring in the first place, and protect your employees. That’s good business and good risk management.
To get an idea of what your responsibilities as an employer are, check out OSHA’s guide for employers.