Employer’s liability insurance

Employer’s liability is the legal responsibility of an employer to pay damages to an employee who suffers a work-related injury or illness, which can often result in an expensive lawsuit. Your employer’s liability insurance can help offset those legal costs, as well as any settlement.

Your employer’s liability insurance coverage is included in most workers’ compensation insurance policies. Workers’ comp is required in almost every state for employers with one or more employees.

For employees, their workers’ compensation benefits cover medical bills arising from a work-related employee injury or illness. It can also offset some of an injured employee’s lost wages if they’re unable to work for a while.

For employers, the main benefit to workers’ comp is the employer’s liability protection and legal defense it provides from the following types of claims and lawsuits:

An employee sues a third-party over a workplace injury, and the third-party turns around and sues the employer.

An employee’s family members seek punitive damages from the employer if their relative has a debilitating illness, suffered a serious bodily injury, or died in a work-related accident.

An employee is injured from using one of the employer’s products, then sues the company in its capacity as both an employer and a manufacturer.

This could be filed by a non-employee who is impacted by an employee’s work-related injury or illness, such as a family member who faces health problems from caring for an injured worker.

Employer’s liability insurance is included in most workers’ compensation policies, so the coverages are related but not the same.

Workers’ compensation insurance covers the medical expenses for an employee’s work-related injuries and illnesses, along with some of their lost wages.

Employer’s liability insures a business owner against lawsuits over an employee injury or illness.

Sole proprietors who have no employees typically aren’t required to carry employer’s liability coverage. They may have to carry workers’ comp insurance if they work in a profession with higher risk, such as construction and building trades.

If you’re self-employed or an independent contractor, you might need a workers’ comp policy to fulfill the terms of a contract.

Workers’ compensation can also come in handy if you have a work-related injury or occupational disease and are unable to work for a while. Your regular health insurance is unlikely to cover you for a work-related mishap.

In most states, your employer’s liability insurance is included in the workers’ compensation coverage you purchase from a private company.

In the states of North Dakota, Ohio, Washington, and Wyoming, employers must buy workers’ comp insurance from a state fund. In 10 other states, employers have the option of buying their workers’ comp coverage from a state fund or the private market.

State-operated workers’ comp funds don’t include employer’s liability coverage, so if you buy workers’ comp through a state fund you’d need to buy a separate employer’s liability policy from an insurance company.

You might buy employer’s liability coverage as a separate policy, known as stop gap coverage, or as an add-on endorsement to your general liability insurance.

If you’re in need of employer’s liability or workers’ compensation insurance, you can buy coverage from Insureon and get your certificate of insurance (COI), typically in less than 24 hours.

Your workers' comp insurance premium is calculated based on your location, number of employees, and the risks within your particular field.

Insureon’s small business customers pay an average of $45 per month or $542 annually for workers’ comp insurance, while 23% pay less than $30 per month and 40% pay between $30 and $60 per month.

Our figures are sourced from the median cost, which offers a better estimate of what your business is likely to pay because it excludes high and low premium outliers.

There are several options for saving money on workers’ compensation premiums.

If your business has few risks and a small number of employees, you might be eligible for a minimum premium workers' compensation policy. This offers the smallest premium an insurance company will sell a policy for, with the minimum amount of coverage.

Most workers’ comp premiums are based partially on your annual payroll figures. If your number of employees fluctuates throughout the year, you might opt for a pay-as-you-go workers' comp policy. Your monthly premiums would be based on how many employees you have within each month.

If you’re a sole proprietor and exempt from your state’s workers comp requirements, yet you need proof of workers’ comp insurance to qualify for contracts, a workers’ comp ghost policy would give you that proof of insurance at a minimal cost. Just be aware that a ghost policy only offers proof of insurance, without any real coverage.

Employer’s liability insurance offers financial protection against employee lawsuits and settlements for work-related injuries and illnesses.

It’s included with the workers’ comp insurance you buy from an insurance carrier or can be purchased separately if you get your workers’ comp coverage from a state fund.

Employment practice liability insurance (EPLI) covers lawsuits and settlements related to your employment practices, such as a violation of an employee’s rights or a hostile work environment.

ELPI isn’t included in your workers’ compensation insurance and is typically purchased by business owners and directors.

EPLI coverage includes employee claims of:

Check with an Insureon agent to see if your workers’ compensation policy fully covers the workers’ compensation claims you might face, and learn what other types of small business insurance you may need. For free quotes from top insurers, fill out Insureon’s online application with details about your business.