Employer’s Liability Insurance

Employer’s liability insurance is designed to protect a company and its workers by offering a level of coverage that protects workers against injuries or fatalities that are the fault of the company or a third party whilst the employee is on company business. It is not the same as worker’s compensation, which is a form of insurance designed to cover lost wages and medical benefits to a worker but at the expense of the worker’s right to sue their employer for negligence. Read on to better understand the differences in the meaning of employer's liability insurance vs worker's compensation.

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Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insurance...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years

UPDATED: Oct 30, 2020

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Liability insurance is a type of insurance policy that protects a party against a claim from a 3rd party through legal action or through a claim directly against the policy. It is not usually designed to pay out any compensation to the insured party, but only to other claimants.employers liability insurance

In the case of liability insurance the insurer bears the legal responsibility and duty of protecting the insured party from unreasonable claims.

What is Employer’s Liability Insurance?

In the United States employer’s liability insurance is designed to protect a company and its workers by offering a level of coverage that protects workers against injuries or fatalities that are the fault of the company, or a third party whilst the employee is on company business.

It is not the same as worker’s compensation which is a form of insurance designed to cover lost wages and medical benefits to a worker but at the expense of the worker’s right to sue their employer for negligence. Worker’s compensation can paid in similar ways to payouts made under employer’s liability insurance.

Employer’s liability insurance is designed to cover those areas of work which are not already covered under workers’ compensation plans.

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Are there any restrictions on employer’s liability insurance?

In many of the American states the insurers are prohibited by law from imposing any unreasonable conditions for companies who want to be insured. In practice this even forbids the insurer from requiring the company to obey the law in regard to current safe working environments.

Is employer’s liability insurance mandatory?

In some states it is, in others it is not. It is highly recommended that employers take out adequate coverage with employer’s liability insurance irrespective of the legal requirements. This is because in the event of a claim many smaller companies can be driven into insolvency in the event of a successful legal action against them.

How do I know if my work place is covered by employer’s liability insurance?

There may be a mention of employer’s liability insurance in your contract of employment or in the terms and conditions detailed in your employee handbook – if it is not detailed in the documents, your employer may still have employer’s liability insurance and you should contact your line manager or HR department to find out exactly what kind of coverage is in place for your work place.

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Other Employers Liability Insurance Definitions

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