Workers’ Compensation and Employer’s Liability


Workers’ Compensation:
Provides coverage for the employer’s obligation to its employees who become injured on the job or contract work-related diseases. Laws vary by jurisdiction, however, in all cases, workers’ compensation laws provide three basic benefits and most also provide a fourth:

1. Medical

2. Disability Income

3. Death and Survivor Benefits

4. Rehabilitation

Employer’s Liability Insurance:
Most work-related injuries and occupational diseases are compensable under the Workers’ Compensation laws of various states which is described as (part-one) Workers’ Compensation Insurance; a small percentage of claims do not fall within the scope of the Workers’ Compensation coverage part and as a result, the Employer’s Liability Insurance (part-two) was designed to insure those claims not insured in (part-one). (Part-two) claims must be derived from actual or alleged work-related injuries or occupational diseases for which the employer is held legally obligated to pay. Examples of claims that may be paid under the Employer’s Liability Insurance section are:

  • Third party liabilities: These are claims made against the employer by others (third parties) who have been held liable for an employee injury which was caused in whole or part by the insured. Sometimes these are referred to as third party action over claims.
  • Consequential bodily injury to a spouse or immediate relative of the employee.
  • Care and loss of services such as loss of consortium or companionship.

Monopolistic States:
While most states allow employers to purchase Workers’ Compensation Insurance from private insurers, there still remains a handful of states that require employers to purchase Workers’ Compensation directly from a state plan. Failure of employers to purchase Workers’ Compensation from these monopolistic states can put an employer at risk with uninsured losses, states could impose penalties and employees may be forced to stop working at a very inopportune time. The following states currently represent the monopolistic states: North Dakota, Ohio, Washington, West Virginia and Wyoming. It’s important to note that while you must purchase your Workers’ Compensation (part-one) from these state funds, it’s still necessary to purchase the Employer’s Liability (part-two) from a private insurer as the state funds do not offer this coverage part.

Most jurisdictions permit some form of self-insurance other than North Dakota and Puerto Rico. Self-insurance can be in the form of an individual company or a group whereby multiple employers pool their resources together.


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