Coverage Part B
The employers liability section of the workers comp policy with specific dollar limits, covering employment injury claims outside the statutory system.
What It Is
Coverage Part B is the Employers Liability Insurance section of the workers compensation and employers liability policy. While Coverage Part A covers statutory workers compensation benefits with no dollar limit, Coverage Part B covers the insured's liability for employment-related injuries that fall outside the workers compensation statute, subject to specific dollar limits.
The standard Coverage Part B limits are structured as three separate limits: Each Accident ($100,000 standard), Disease — Policy Limit ($500,000 standard), and Disease — Each Employee ($100,000 standard). These limits can be increased by endorsement or by policy structuring.
Coverage Part B responds to claims including third-party-over actions, dual-capacity suits, consequential bodily injury to family members, and claims in jurisdictions where workers compensation is not the exclusive remedy. It also serves as the underlying coverage for umbrella and excess liability policies' employers liability coverage.
Why It Matters for Brokers
Coverage Part B limits are a commonly overlooked adequacy concern. Many brokers leave these at the minimum $100K/$500K/$100K without considering the client's exposure or contractual requirements. Umbrella policies typically require minimum employers liability limits of $500,000 or $1,000,000 per each of the three limits. If the underlying EL limits do not meet the umbrella's requirements, the umbrella may not drop down to cover the gap — leaving the client exposed between the insufficient EL limits and the umbrella attachment point.
Real-World Example
A mechanical contractor carries a workers comp policy with standard $100,000/$500,000/$100,000 Employers Liability limits and a $5M umbrella policy that requires $1,000,000/$1,000,000/$1,000,000 EL underlying limits. A third-party-over claim results in a $650,000 judgment against the contractor. Coverage Part B pays only $100,000 (the Each Accident limit). The umbrella does not drop down because the underlying EL limits do not meet the umbrella's required $1,000,000 threshold. The contractor is personally liable for the $550,000 gap. Increasing the EL limits to $1M/$1M/$1M at inception would have cost approximately $1,500 in additional premium.
Common Mistakes
- 1Not coordinating Coverage Part B limits with the umbrella policy's underlying requirements, creating a gap between the EL limits and the umbrella attachment.
- 2Leaving all three EL limits at minimum when the account's exposure profile (construction, manufacturing) warrants higher limits.
- 3Confusing the three Coverage Part B limits — Each Accident, Disease-Policy Limit, and Disease-Each Employee serve different purposes.
How brokerageaudit.com Handles This
Policy Checker extracts all three Coverage Part B limits and cross-references them against the umbrella policy's underlying limit requirements. It flags any mismatch as a critical coverage gap. Submission Intake includes Coverage Part B limit recommendations based on the client's industry, payroll size, and umbrella requirements to ensure adequate limits are quoted from the start.