Employer's Liability

Example

“When a construction worker sued his employer claiming inadequate safety training led to his injury, the company's employer's liability coverage defended against the lawsuit that fell outside standard workers' compensation.”

Memory Tip

Think 'ELI = Extra Legal Issues' beyond workers' comp - employer's liability covers the extra legal exposures that workers' compensation doesn't handle.

Why It Matters

Workers' compensation doesn't cover all possible employee lawsuits, leaving employers vulnerable to significant legal costs and damages. Employer's liability insurance fills these gaps, protecting businesses from potentially devastating legal judgments and defense costs.

Common Misconception

Many employers believe workers' compensation insurance covers all employee injury-related lawsuits, but it doesn't. Others think general liability insurance covers employee injuries, but it typically excludes coverage for injuries to the insured's own employees.

In Practice

ABC Manufacturing has both workers' comp and employer's liability coverage with a $1 million limit. Employee John suffers a back injury and receives workers' comp benefits, but then sues the company claiming his supervisor knew the equipment was defective but failed to warn him. This lawsuit seeks damages beyond workers' comp benefits for pain and suffering. The employer's liability coverage pays for legal defense costs ($50,000) and ultimately settles the case for $200,000. Without this coverage, ABC Manufacturing would have paid $250,000 out-of-pocket for a situation not covered by workers' compensation.

Etymology

"Employer" from French "employer" meaning "to use" and "liability" from Latin "ligare" meaning "to bind" - referring to the legal obligation or responsibility that binds an employer.

Common Misspellings

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See Also