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Employers Liability Insurance

Employers' Liability Insurance

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If an employee suffers a work-related injury or illness, your business could be sued. Outside of workers’ compensation protections, an employee could pursue additional damages. Employers Liability Insurance protects your business from this risk.

What is Employers Liability Insurance?

Employers Liability Insurance covers your business if an employee sues your company for a work-related injury or illness, outside of what is covered under workers’ compensation insurance. Employers Liability coverage is typically sold as part of a worker’s comp policy and is often referred to as “Part 2” of workers’ compensation.

The main purpose of workers’ compensation insurance (Part 1) is to make sure an employee who is injured or gets sick on the job is covered for medical expenses and lost wages. Employers Liability Insurance is meant to protect your business from liability if an injured employee sues for additional damages.

As we will explain in this article, there are a number of different types of lawsuits that an employee or a family member of an employee can bring against your business after a job-related injury or illness that worker’s compensation and general liability insurance will not cover.

Why do I need Employers Liability Insurance?

The National Safety Council reports that approximately 4.6 million workers are injured on the job every year. Some of the most common activities that cause injury are lifting heavy objects, carrying out repetitive motions, getting struck by a piece of equipment, and slips and falls. Although the five industries that are most likely to see injured workers are service, transportation, manufacturing, installation/repair, and construction, workers in any type of job can get injured or become ill.


Most states require employers with at least one employee to carry workers’ compensation, which typically includes Employers Liability Insurance. While worker’s compensation (Part 1) covers medical expenses, lost wages, rehabilitation costs, death benefits, and funeral expenses, Employers Liability Insurance helps to cover other damages that an employee who has fallen ill or been injured on the job might sue for.

What does Employers Liability Insurance cover?

When an employee agrees to receive workers’ compensation benefits, the employee is not legally permitted to sue the employer for additional compensation in most cases. However, there are some exceptions. Employees falling under these categories can sue for additional damages, and legal costs, judgments, and settlements would be covered by Employers Liability Insurance:

Employers Liability Insurance also covers the following types of lawsuits:

Third-Party-Over Action

An employee who has been injured or fallen ill on the job generally can’t sue their employer if they have agreed to workers’ compensation benefits, but they can potentially sue a liable third party, and that third party may then, in turn, sue the employer, depending on the employer’s contractual obligations. For example, if the employer has signed a contract with the third party that indemnifies and holds harmless the third party from lawsuits, then the third party can bring a “third party over action” (also called “third party action over”) lawsuit against the employer.

Loss of Consortium

If an employee has been seriously injured or killed on the job, the spouse or family member can sue the employer for negligence or an intentional act that caused the injury. What has the spouse or family member lost from the death or injury of the employee that they could make a claim for under a “Loss of Consortium” lawsuit? It wouldn’t be any tangible economic losses, but things that money would only be a rough substitute for such as love, companionship, and reputation, and a few other benefits of having that person in their lives.


This type of lawsuit can be filed when an employee has more than one relationship with an employer, and it typically applies to manufacturers. An employee of a manufacturing company who has been injured can collect workers’ compensation benefits and file a lawsuit against the employer in its capacity as a manufacturer, not as the employer.

Consequential Body Injury

A family member of the injured employee can sue the employer for injuries he or she sustained as a consequence of the employee’s injury.

What are the key exclusions to Employers Liability Insurance?

Intentional acts

Liabilities you assume under contract

Injuries of workers who are illegally employed

Injuries to workers covered under certain federal laws

Employees outside of the United States or Canada

Independent contractors

What are the limits of Employers Liability Insurance?

Employers Liability Insurance typically places limits on what the insurer will pay out per employee, per injury, and per illness. For example, it could be a $250,000 limit per employee and a $100,000 per incident. However, note that you can purchase commercial umbrella insurance to provide additional coverage for Employers Liability if the limits have been exhausted.

How much does Employers Liability Insurance cost?

Employers Liability Insurance is typically included as part of a workers’ compensation policy. The premiums on workers’ compensation insurance vary depending on a number of factors. Though most small businesses pay less than $1,000 annually for workers’ comp, much of the final pricing will depend on your company’s risk to insure.

Pricing for workers’ compensation insurance is based upon a number of factors, including:

In order to get an accurate estimate on pricing, it’s best to get a quote from a reputable insurance agent or insurance company. Below we’ve highlighted a few of our trusted partners who offer workers’ compensation insurance:

ProviderWorkers' CompensationGeneral LiabilityProfessional Liability

Is Employers Liability the same as workers’ compensation insurance?

Workers’ compensation insurance is intended to cover the medical expenses and lost wages of an employee who suffers a work-related illness or injury. Employers Liability Insurance, however, is meant to protect your business from liability in the case that an injured employee sues for additional damages.

Generally, to receive workers’ compensation benefits, an employee must agree to not sue an employer for the injury or illness. The employee will receive the workers’ compensation benefits regardless of whether the employer is actually at fault for the injury or illness. If an injured employee sues the employer for damages related to the injury that workers’ compensation does not cover, Employers Liability Insurance will cover the defense costs and any judgments or settlements against the employer.

What is the difference between Employers Liability and employment practices liability?

While it’s certainly easy to confuse the two, employment practices liability insurance provides financial protection for your business against different kinds of lawsuits by employees. Employers Liability Insurance covers lawsuits filed by employees who have been injured or fallen ill on the job, while employment practices liability insurance covers lawsuits by employees accusing your business of wrongful treatment such as wrongful termination, discrimination, harassment, retaliation, and other wrongdoing related to their employment.

Final Word

There are a number of ways that employees who are already covered by workers’ compensation can sue your business for injuries or illnesses sustained on the job. At times, it is not only the employee who can seek damages, but also their husbands, wives, and other family members. Employers Liability Insurance will cover the defense costs, court costs, judgments, and settlements for various costs from employee lawsuits including third party over action, loss of consortium, dual capacity, and consequential bodily injury. Employers Liability Insurance is an essential part of workers’ compensation that protects businesses from the consequences of employee injuries and illnesses.

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