Employer’s Liability insurance vs. Workers’ Compensation: what’s the difference?
Have you heard of employer’s liability and workers' compensation coverage? Both relate to workplace injuries, health issues, or fatalities, but they serve different purposes and protect different parties. If you’re a business owner, it’s important to understand the protection provided by employer’s liability insurance vs. workers’ compensation insurance.
Let’s delve into the relationship between employer’s liability insurance and workers’ compensation insurance.
What is Workers’ Compensation insurance?
Workers’ compensation insurance (it’s also called “workers’ comp” or sometimes “workman’s compensation insurance”) is a type of insurance that protects employees and companies if a worker is hurt, has a health issue, or dies at work. It can also pay a death benefit to surviving family members if an employee dies while working.
Most companies with employees are required by their states to have workers’ compensation insurance. Workers get peace of mind since they don’t have to worry about an on-the-job incident creating a huge financial burden for them and their families.
This type of policy can cover things like medical and rehabilitation expenses and a portion of the person’s income while they recover. Workers’ compensation coverage from biBerk includes employer’s liability insurance to protect the business, as described below.
What is Employer’s Liability insurance?
Employer’s liability insurance protects employers from lawsuits over costs related to a worker’s injury but not covered by workers’ compensation insurance. For example, let’s imagine an employee is disabled by a work-related injury and has to be cared for by their spouse. The spouse suffers a back injury while assisting them. In that case, employer's liability insurance can cover legal costs, settlements, or judgments resulting from the lawsuit.
The combination of workers’ comp and employer’s liability insurance protects both sides if someone is injured, has a health issue, or dies at work.
A real-world scenario involving Workers’ Comp and Employer’s Liability insurance
Wondering about when and how these two types of coverage are used? Here’s a scenario that can help clarify the difference between employer’s liability and workers’ compensation.
Mike is a construction worker for XYZ Construction. His boss has him installing drywall on the second floor of a building the company is renovating. Nobody has inspected the scaffolding he’s using as required. While he’s working, the scaffolding collapses, causing Mike to fall and suffer multiple fractures and a head injury.
Mike’s workers' compensation claim
Mike files a workers' compensation claim to cover his medical expenses and rehabilitation costs, which are expected to exceed $100,000. He also seeks some of his lost wages while he’s getting treatment and can’t work. Since his injuries directly resulted from his employment, his claim is approved, and he starts getting benefits.
Mike’s wife’s loss of consortium lawsuit against XYZ Construction
Mike’s treatment reveals he will be permanently disabled from his accident. His disability causes what’s called loss of consortium, meaning it damages his relationship with his wife. She sues the company over that loss.
The results
As we noted above, Mike’s workers’ comp claim was approved, and he began receiving compensation for his medical and rehab bills and lost income. XYZ Construction's employers' liability insurance would be activated to cover the costs of the loss of consortium lawsuit. This includes legal fees, court costs, and any potential settlement or judgment awarded.
The outcome of the lawsuit would depend on various factors, including the strength of the evidence supporting the claim and any legal defenses raised by the company.
This example shows how a single workplace injury can trigger both a workers' compensation claim and a separate lawsuit addressed by employer’s liability, highlighting the importance of both types of insurance.
Get Workers’ Compensation and Employer’s Liability insurance from biBerk.
Running a business is challenging enough without having to worry about the consequences for employees and their families if a worker gets hurt, has a health issue or dies on the job. That’s why understanding employer’s liability vs. workers’ compensation is important, and having both coverages is essential.
Employer’s liability insurance is automatically included in a workers’ comp policy. (You can increase your policy limits over the base amount if you prefer.) In states where workers’ comp must be purchased from the government (Ohio, North Dakota, Wyoming, Washington), business owners can buy employer’s liability from a private insurer, including as an addition to a general liability or business owners policy (BOP).
Workers’ compensation insurance keeps incidents from hurting employees financially, and the employer’s liability coverage in the policy protects your business from negligence -related lawsuits.
You can get all that protection quickly and affordably from biBerk. Get an instant quote for a workers’ compensation policy that includes employer’s liability insurance on our website whenever it’s convenient. After reviewing your quote, you can purchase the policy online, too, for maximum convenience. Coverage can typically be active as soon as the next day, giving you and your team peace of mind!
The information above is of a general nature and your policy and coverage provided may differ from the examples provided. Please read your policy in its entirety to determine your actual coverage available.