Own a business? Manage a business? Let's clear up a misconception regarding Workers Compensation Insurance. On every policy there are Employer's Liability Limits. There is a limit for Each Accident; a limit for Disease--Policy Limit; and a limit for Disease--Each Employee. Naturally, we strongly recommend every employer carry the highest limits their underwriter will allow (usually $1,000,000 per limit). Yet it's surprising, when an employer purchases a workers comp policy, he or she assumes that the Employer's Liability Limits are the extent to which the policy will pay an injured worker. If an employee is injured on the job, for example, and the employer's policy carries a $1,000,000 limit for Each Accident, then $1 million is the most the injured worker can recover, right?
That's not correct! Employer's Liability has nothing to do with how much an injured employee can collect. There are NO limits when it comes to employee injuries. If a worker is severely injured and therefore becomes totally disabled, he or she will be able to collect workers comp benefits for the remainder of his or her life. These benefits may far exceed the $1,000,000 limit shown on the policy.
So then, what is Employer's Liability for? This is insurance for the employer in the event the employer is sued by a THIRD party, say, the spouse of an injured worker, who brings suit claiming the injuries were caused by the employer's negligence. Lawsuits for wrongful death, mental anguish, and loss of consortium, are examples of litigation brought under Employer's Liability. In such an event, the workers comp insurance carrier would step in to defend the employer, and should judgment be awarded to the plaintiff, pay up to the limit called for on the policy.
It's a common misconception, but a misconception nonetheless we feel obligated to address. Costs for worker injuries are open-ended; Employer's Liability covers the employer in the event a lawsuit is brought by a third party. If you have any questions regarding this important coverage, give us a call!