How It Differs From Workers' Compensation

Workers' compensation (Part One of the policy) pays an injured employee's medical bills and lost wages on a no-fault basis, regardless of who caused the accident, and in exchange the employee generally cannot sue the employer. Employers liability (Part Two) exists for the gaps and exceptions to that trade-off: lawsuits from a spouse for loss of consortium, third-party over lawsuits (where an injured worker sues a client or contractor, who then sues the employer), consequential bodily injury claims, and dual-capacity claims where the employer is also sued as a product manufacturer or property owner.

• Workers' comp: pays medical and wage-replacement benefits directly, no lawsuit needed.
• Employers liability: pays defense costs and damages when a lawsuit is filed over the injury instead of, or on top of, the comp claim.

What Triggers an Employers Liability Claim

Common triggers include an employee's family member suing for loss of companionship after a workplace death, a third party who was sued by the injured worker turning around and suing the employer for contribution, or an employee arguing the injury falls outside the workers' comp system entirely. Because these are lawsuits rather than benefit claims, defense costs alone can be substantial even before any settlement or verdict.

Why the Limit You Choose Matters

Most workers' comp policies come with employers liability limits of $100,000/$500,000/$100,000 (per accident/disease policy limit/disease per employee) by default. For a business with high payroll, hazardous work, or exposure to third-party over suits (common in construction and manufacturing), that default limit can be exhausted by a single serious injury lawsuit, leaving the business paying the rest out of pocket. Raising the limit to $500,000 or $1,000,000 across the board is often inexpensive relative to the exposure it removes.