Employer’s Liability Insurance

Employers 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 company’s fault or a third party while the employee is on company business.

It is not the same as workers’ compensation coverage, 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 file an employee lawsuit against their employer for negligence or bodily injury. Read on to better understand the differences in the meaning of employer’s liability insurance vs workers’ compensation insurance.

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 or employment practices liability insurance.

On the other hand, 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?

Before you try and calculate the loss ratio, let’s find out what an employer’s liability insurance policy is first.

In the United States, employers liability coverage is a business insurance 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 personal lines insurance, employment practices liability insurance (EPLI policy), public liability insurance, or even the worker’s compensation insurance.

Workers’ compensation coverage includes punitive damages, lost wages and medical benefits to a worker but at the expense of the worker’s right to sue their employer for negligence. However, it does not cover wrongful termination, unemployment expenses, or injury outside work. Worker’s compensation can be paid in similar ways to payouts made under an employer’s liability coverage.

On the other hand, EL insurance is designed to cover those areas of work that are not already covered under workers’ compensation plans.

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Are there any restrictions on employer’s liability insurance?

In many 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 regarding 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 workplace is covered by employer’s liability insurance?

There may be a mention of employer’s liability insurance in your employment contract or in the terms and conditions detailed in your employee handbook.

Suppose, it is not described 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 workplace.

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Other Employers Liability Insurance Definitions

• eHow
• Business Dictionary