Workers’ Compensation vs Employer’s Liability

The Difference Between Workers’ Compensation and Employer’s Liability

Today we continue our introductory series on Commercial Lines Insurance for personal lines agents, CSRs and underwriters.

Most insured’s purchase Workers’ Compensation (WC) policies because of the legal requirement of the state(s) have that they are operating in.  But, what most insured’s don’t understand is the difference between WC and Employer’s Liability coverage, which is usually included as a separate coverage on their WC policy.


Image via totalwc.com

WC policies provide coverage for employees if they are injured while working, without regard to fault.  The policies will pay for medical expenses as well as  loss of income due to not being able to work.  The policy declaration pages show “Statutory” for the limit, meaning that the carrier must pay whatever the legal requirement is in the respective state.  In other words, the limit on a WC policy is mandated by each state and can vary depending on the type of injury.  Here’s an example:

A waitress trips and falls while serving food and breaks her ankle.  The cost of the medical expenses is $3,000 and the time she missed away from work caused her to lose $1,000 in income.  The WC policy will provide coverage for $4,000 (the total medical expenses plus the total loss of income).


Image via bishoplegal.com

The other part of a WC policy is Employer’s Liability.  This provides coverage for an employer in the event an employee does not feel the WC policy provided adequate coverage and that the employer was negligent.  It is important for agents to read the policy language defining the specific triggers for employer’s liability coverage.  Most policies will only respond to very specific instances in which the insured can be found liable to the employee or a related third party such as a spouse.  Here’s an example of this coverage:

A construction worker feels that using a steel ladder will best help him complete his roofing job.  However, the employer feels that using a wooden ladder is best and mandates that he use the wooden ladder.  While working on the wooden ladder, it collapses and the employee is injured.  He files a WC claim but does not feel it is adequately reimbursing him for his lost wages while he is unable to work.  He files a claim against the employer claiming that they were negligent in not providing an adequate ladder for the job.  The Employer’s Liability policy will provide coverage for this claim.

Image via thinkglink.com

Note that the Employer’s Liability coverage lists a specific limit, unlike the WC policy which is statutory.  In monopolistic states (where the WC coverage is required to be purchased from the state), the Employer’s Liability coverage can be found on the General Liability policy.

3 thoughts on “Workers’ Compensation vs Employer’s Liability

  1. Having someone injured at work is a loss in business that’s why it is important to have a strict compliance on the safety of everyone. Checking the facility and equipment regularly is a big help to see faulty equipment that can lead to accidents. Conducting training on safety is also needed to have a safe working environment.

  2. Am I reading this correctly? It’s legal to file both a workers comp injury claim and a claim against my employers general liability insurance? My employer only had a $10,000 general liability policy in place at the time, however, I would like to proceed with this. I am already 4 years into getting jerked around in my WC claim, and have a feeling it will go on for quite some time. I need to recoup some costs and they were very negligent, I have all the proof. I think I can handle claim myself even.
    Please advise.
    Thank you

    • Hi Jill. Just want to clarify that we don’t offer legal advice, we are not lawyers, we mostly offer career advice for insurance professionals and some general technical information for them. The information here is of a general nature and we can’t advice you on this matter, only a lawyer properly admitted to your state’s bar association can properly advise you on this.

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