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The Employers’ Liability Component of Workers’ Compensation Insurance

As an employer, it’s your responsibility to ensure your workers remain both safe and healthy on the job. However, accidents are common even in otherwise safe industries, making workers’ compensation coverage a must. These policies have two main parts—Part One: Workers’ Compensation Insurance and Part Two: Employers’ Liability Insurance.

This Work Comp Insights will examine Part Two, giving you a better sense of what’s covered under your policy.

Part Two and What It Covers

The main purpose of workers’ compensation insurance is to ensure that injured workers receive medical care and benefits when they are injured on the job and unable to work (Part One). However, employees may still sue your organization for damages if they feel your negligence caused the injury in the first place. That’s where Part Two of workers’ compensation insurance comes in.

Part Two, which is often referred to as employers’ liability insurance, protects your organization should employees file a lawsuit following an on-the-job accident that isn’t subject to state statutory benefits. This component of workers’ compensation insurance pays for attorney’s fees, court costs, and settlements or judgments. Employers’ liability coverage can be especially useful following a variety of claims, including:

  1. Third-party action—If an employee is injured at work, they may not sue you directly. However, they could sue a third party who could then file their own lawsuit against you. For instance, if an employee hurts themselves on a piece of machinery, they could sue the equipment manufacturer. That manufacturer could then sue you if they feel your negligence led to the accident.

  2. Loss of consortium—In the event that an employee is injured, a spouse may file a lawsuit for injuries that result in a loss of a family relationship. For instance, should an employee be severely injured or killed on the job, employers’ liability coverage can provide a level of protection.

  3. Dual-capacity suit—These types of lawsuits occur when an employer and employee have more than one relationship. One common example of this is when an employee is injured by a product that the employer manufacturers. In this case, the organization could be held liable as both an employer and a manufacturer.

  4. Consequential body injury—These types of claims refer to consequential damages linked to the initial accident. For instance, a spouse may sue your organization should the injury to their loved one negatively impact their own health (e.g., elevated blood pressure).

Not all workers’ compensation policies include employers’ liability coverage automatically. As such, it’s important to speak with a qualified insurance broker who can help you better understand your coverage and identify any gaps.

For more information, contact E.B. Cohen today.


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