Employer’s Liability Insurance

Employers’ liability insurance is an insurance policy that handles claims from workers who have suffered a job-related injury or illness not covered by workers’ compensation.

What Is Employers' Liability Insurance?

Employer’s Liability Insurance, also known as Workers’ Compensation Insurance, provides coverage to employers for liability they may have towards employees for workplace injuries or illnesses. The coverage varies depending on the policy and jurisdiction, but it provides a safety net for both employers and employees in case of workplace injuries or illnesses.

However, employers’ liability insurance does not cover legal costs from employee lawsuits charging discrimination, sexual harassment, or wrongful termination. To cover these situations, an employer would need to purchase a separate type of policy called employment practices liability insurance (EPLI).

Benefits of Employer’s Liability Insurance

Protecting employers from financial losses resulting from lawsuits or legal claims
Providing benefits to employees for workplace injuries or illnesses
Promoting workplace safety by incentivizing employers to maintain safe working environments
Complying with legal requirements in many jurisdictions
Providing peace of mind for both employers and employees

What Employers' Liability Insurance Covers

Third-party lawsuits: Filed by another entity distantly involved in the workplace incident. An employee may be injured by a piece of equipment on the job, for example, and sue the equipment manufacturer—who then files suit against the employer.
Loss of consortium lawsuits: Filed by family members of a deceased or disabled employee, seeking compensation for the loss of the relative or their income.
Consequential bodily injury lawsuits: Filed by a non-employee who suffers physical damage as a result of an employee's injury, such as a spouse who develops health problems from taking care of the injured worker.
Dual-capacity lawsuits: When an employee sues their employer both as an employer and as something else—the maker of a product, provider of a service, landlord, etc.3 One example: A piece of a ceiling in the workplace falls and hits a worker, and they file suit against their company in its dual capacity as employer and as the premises owner.
Employers' liability insurance covers companies against costs and claims by employees that are not covered by workers' compensation.

Most workers’ compensation insurance policies automatically include employers’ liability insurance.

Employers’ liability insurance places limits on the amounts paid out per employee, per incident, or per policy.

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Employer’s Liability Insurance