Employer's Liability Insurance Definition

The "Legal-Ease" Glossary
Employer's Liability Insurance

This is a small business insurance policy that protects business owners from lawsuits filed over workplace injuries. Often, these lawsuits allege that the employer created or facilitated an unsafe workplace that enabled the injury.

Most of the time, Employer’s Liability Insurance is part of Workers’ Compensation Insurance. The first portion of your Workers’ Comp covers expenses related to employee occupational injuries, while the second part pays for your legal expenses if an employee waives their benefits and decides to sue your business over the injury instead.

Additionally, Employer’s Liability Insurance can cover lawsuits over…

  • Third-party actions. Your employee can sue another company for their injuries, and then that company can turn around and sue you to recoup losses. For example, say one of your restaurant employees was injured using a stove that wasn’t properly maintained. If the employee sues the manufacturer, the manufacturer can sue you for contributory negligence.
  • Loss of consortium. If your employee’s injury affects their ability to engage in marital affection, the employee’s spouse could sue.
  • Dual capacity. You can be held liable as both an employer and manufacturer if the equipment your business produces causes an employee’s injury.
  • Consequential bodily injury. You can be liable for other people’s medical injuries if they are related to your employee’s occupational injuries. For example, a spouse could have a stroke because of the extra stress of taking care of the injured employee and sue you for medical expenses.

Given the many ways an employer can be sued over occupational injuries, it’s a good thing Employer’s Liability Insurance can cover…

If you are concerned about not having high enough limits for your Employer’s Liability coverage, consider carrying Umbrella Insurance. If your Employer’s Liability policy reaches its limits, you can apply your Umbrella coverage toward the claim.

To learn more, read our blog post, “What Is Employer’s Liability Insurance?