Employers Liability
Coverage Part B of the workers compensation policy, providing liability coverage for employment-related injury claims outside the workers comp statute.
What It Is
Employers Liability is Coverage Part B of the standard workers compensation and employers liability policy. While Coverage Part A pays statutory workers compensation benefits, Coverage Part B provides liability coverage for employment-related injury claims that are not covered by the workers compensation statute.
Employers Liability responds to claims such as: third-party-over suits (where an injured employee sues a third party, who in turn sues the employer for contribution); loss of consortium claims by an employee's spouse; dual-capacity claims (where the employer is sued in a capacity other than as employer); and claims in states where workers compensation does not provide the exclusive remedy.
Standard Employers Liability limits are $100,000 per accident, $500,000 disease policy limit, and $100,000 disease per employee. These limits can be increased, and many contracts and umbrella policies require Employers Liability limits of $500,000/$500,000/$500,000 or $1,000,000/$1,000,000/$1,000,000.
Why It Matters for Brokers
Employers Liability limits are often overlooked because brokers focus on the workers comp statutory coverage. However, Employers Liability claims can be significant — particularly third-party-over suits in construction, where a general contractor or property owner sues the subcontractor-employer after an injured employee recovers workers comp benefits and also sues the GC. Standard $100K limits are inadequate for most commercial accounts. Brokers should routinely recommend increased Employers Liability limits, especially for construction and manufacturing clients.
Real-World Example
A subcontractor's employee is injured on a construction site and receives $280,000 in workers comp benefits (Coverage A). The employee also sues the GC for unsafe site conditions. The GC settles with the employee for $600,000, then sues the subcontractor for contractual indemnification (a third-party-over suit). The subcontractor's Employers Liability (Coverage B) responds to the GC's claim. If the sub's EL limits are the standard $100,000 per accident, the sub is personally liable for the remaining $500,000. If the broker had recommended $1M EL limits, the full $600,000 would be covered.
Common Mistakes
- 1Leaving Employers Liability limits at the minimum $100,000/$500,000/$100,000 on construction accounts where third-party-over suits are common.
- 2Not checking whether the umbrella policy's underlying requirements specify minimum Employers Liability limits — most umbrellas require $500K or $1M EL limits.
- 3Failing to explain the difference between Coverage Part A (statutory, no limit) and Coverage Part B (liability, specific limits) to clients.
How brokerageaudit.com Handles This
Policy Checker extracts Employers Liability limits from the workers comp policy and compares them against contract requirements and umbrella underlying limit requirements. It flags any account where the EL limits are at minimum and the client's operations suggest higher limits are needed. COI Manager displays the Employers Liability limits in the workers comp section of ACORD 25 certificates.