Workers' Compensation Insurance
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Workers' compensation insurance limits

Workers' compensation insurance covers medical costs and disability benefits for work-related injuries and illnesses. Like other liability policies, workers' comp has a limit. However, it's different because the policy limits are divided into two parts: employee benefits and employer's liability.

What are the two different types of workers' compensation limits?

Unlike general liability insurance, which covers third-party bodily injuries and property damage, workers' compensation insurance covers costs related to employee workplace injuries and illnesses. This policy also helps protect business owners and sole proprietors from financial loss if they're injured on the job and are unable to work, since personal health insurance usually won't cover this.

Workers' compensation laws often vary by state, however, small businesses usually need this policy the moment they hire their first employee (or a specific number of employees).

Additionally, in most instances, a workers' compensation insurance policy includes employer's liability insurance. This coverage protects your business when an employee sues over a work injury or illness.

The limits on workers' comp insurance are broken down into two pieces:

  1. Employee benefits, sometimes called Coverage A or Part A
  2. Employer's liability, often called Coverage B or Part B

Employer's liability coverage may not be available for your business if you operate in a monopolistic state, where workers' comp is purchased from a state fund. It's best to consult with a licensed insurance agent to ensure you're getting the right insurance for your business and location.

Find the best workers' comp coverage for your business

How do workers' comp limits work?

As stated above, a workers' comp policy limit is broken down into two parts: employee benefits and employer's liability. Let's take a closer look at these two key elements.

Employee benefits

Part A, or employee benefits, provides coverage for employee medical expenses and rehabilitation expenses, as well as disability benefits, as a result of a work-related injury or illness that leaves them unable to work. In some cases, it can pay out death benefits to your employee's dependents.

Generally, there are no limits or exclusions to this coverage. Insurance providers will typically pay the full claim to cover any necessary treatments and medical bills for an employee's injury, occupational disease, and rehab.

However, it's up to each state's discretion on the amount of time and financial limit of disability benefits paid out to employees who are unable to work.

Employer's liability

Part B, or the employer's liability portion of the policy, protects your business should an injured employee decide to sue you for a work-related illness or injury. If an employee claims they were injured due to negligent practices, they may sue your business for damages, in addition to their workers' compensation benefits.

Should this happen, this part of your policy would cover your legal defenses, as well as any judgments or settlements.

Unlike employee benefits, employer's liability does have limits of liability or what your carrier will pay out. This limit is usually decided upon when purchasing your policy.

It's also important to note that Part B only addresses lawsuits related to a workers' compensation claim, and only applies if said claim is covered under your workman's compensation policy.

What are the typical amounts for workers' comp coverage limits?

Employee benefits (Part A), are, in essence, unlimited, based on your insurance company's approval of the reasonable and necessary medical care and rehabilitation for your injured worker. In part, your policy limit for employee benefits is at the discretion of your insurance provider and your state's governing body.

Employer's liability (Part B), conversely has firm limitations to the policy. In most cases, employer's liability limits are typically:

  • $100,000 per accident
  • $500,000 per policy
  • $100,000 per employee

Your employer's liability policy limits can be increased to higher limits, but for a small bump in cost on your workers' comp insurance premium.

For example, some general contractors may require their subcontractors to maintain a certain limit on their policy, which could be higher than the standard policy.

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Workers' compensation insurance cost

The cost of workers' compensation insurance varies based on a number of factors about your business. Your premium is directly impacted by your business location, the number of employees, industry risks, and more.

What is the difference between employer's liability and employment practices liability insurance?

Employer’s liability insurance, typically included in a worker's comp policy, offers financial protection against employee lawsuits and settlements for work-related injuries and illnesses.

Meanwhile, employment practices 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.

EPLI is not included in your workers’ compensation insurance coverage and is usually purchased by business owners and directors. This policy safeguards your business against employee claims of wrongful termination, discrimination, sexual harassment, and other qualifying offenses.

How do I get workers' compensation insurance?

Insureon helps a wide range of businesses get the coverage they need from top-rated U.S. insurance carriers. Complete our easy online application to get free insurance quotes.

Our expert insurance agents can help you choose the best, most affordable workers' compensation coverage that meets the needs of your small business.

You’ll typically be able to get coverage quickly and receive a copy of your workers' compensation insurance certificate on the same day.

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Updated: April 26, 2024
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