Employer’s Liability Insurance
What Does Employer’s Liability Insurance Mean?
Employer’s liability insurance refers to a policy that protects employers from significant financial losses if a worker sustains a job-related injury or illness that is not covered by workers’ compensation insurance.
Insuranceopedia Explains Employer’s Liability Insurance
Liability insurance protects the policyholder from various risks associated with liabilities, typically arising from lawsuits and similar claims. These policies offer coverage against third-party claims, meaning insurance companies pay benefits to individuals who are not part of the insurance contract. The main types of liability insurance include:
- Public Liability Insurance: Covers business-related activities and processes that could potentially affect third parties.
- Product Liability Insurance: Protects businesses involved in manufacturing or supplying products against potential harm caused by those products to consumers.
- Employer’s Liability Insurance: Covers employers if their employees sustain injuries during their employment.
- Third-Party Liability Insurance: Protects against the actions of a third party. For example, if an uninsured third party damages your vehicle, you can purchase third-party insurance on their behalf.
State governments require employers to carry workers’ compensation insurance, which provides benefits for medical expenses and lost wages if an employee becomes ill, injured, or dies due to job-related causes.
However, in some cases, employees may feel that workers’ compensation does not adequately cover their losses, especially if they believe their employer’s negligence caused the injury. In such cases, employees can sue their employer and pursue punitive claims for pain and suffering.
General liability and workers’ compensation insurance policies do not cover these types of claims, which is why employers need to purchase employer’s liability insurance. These policies typically place limits on the amount paid out per employee, injury, or illness and do not cover independent contractors.
