Employers liability insurance vs. workers' compensation
Employers liability insurance and workers' compensation both protect employees and employers against fallout from occupational hazards. These two coverages are typically sold together under a single policy, except in the four monopolistic workers' comp states.
Our experts can help you compare employers liability insurance vs. workers' compensation and get the protection your business needs.
Is employers liability insurance the same as workers' compensation?
No. Both deal with workplace injury and illness, but they cover different things. Workers' compensation insurance pays lost wages and medical expenses for your employees, while employers liability insurance helps you if there's a lawsuit related to the accident.
The mix-up between employers liability vs. workers' comp often happens because employers can get both coverages as part of a single policy in most states. Insurers sometimes refer to them as "part one"and "part two" of a workers' comp plan. But a few states have different rules, so it's important to check workers' comp laws where you live.
Why business owners in monopolistic states need employers liability
North Dakota, Ohio, Wyoming, and Washington are called monopolistic states because workers' compensation is secured through a state fund and not private insurance companies. State-run workers' comp policies don't include employers liability insurance coverage.
Business owners in monopolistic states who want protection against lawsuits can buy standalone employers liability insurance. This coverage is often called stop gap insurance because it fills a gap left by the state fund.
Not sure which policy fits your business? Insurance experts at Progressive Commercial can help. Reach out today to find the coverage that's right for you.
Defining employers liability vs. workers' comp
It's easy to confuse employers liability and workers' compensation because they're usually included in one policy. Understanding what each coverage does can make it easier to know what your business needs and what protections you can expect to get.
Workers' compensation coverage
Workers' compensation insurance supports employees who get hurt or sick because of their job. It specifically applies to work-related injuries and illnesses, not accidents that happen off the clock.
Workers' comp is primarily an employee protection. It helps pay for their treatment, rehab, and lost time at work. Employees who accept these benefits usually can't sue, which lowers your chance of legal battles. However, there are some exceptions, and if you get involved in a lawsuit, this specific coverage won't pay legal fees, court costs, or settlements.
Employers liability insurance coverage
Even though workers' comp typically protects employers from being sued, lawsuits can still happen. Employers liability coverage can help your business in cases that involve gross negligence, intentional harm, or third-party issues.
For example, if an injured employee sues a machine manufacturer for negligence, the manufacturer might sue the employer in return. Family members can also take legal action against an employer if their loved one's injury causes problems at home, like financial trouble or emotional hardship.
Employers liability insurance can pay for your defense, up to your coverage limit, protecting you against costs that workers' compensation doesn't.
ELI and EPLI
It can also be easy to confuse employers liability insurance (ELI) and employment practices liability insurance (EPLI). Both protect employers against legal fees in different ways. ELI helps if you're sued for a workplace injury. EPLI covers lawsuits about your business practices, like wrongful termination or defamation.
Do I need employers liability or workers' comp?
When it comes to workers' compensation vs. employers liability, it's not always an either/or decision. Workers' compensation is mandatory in almost every state. Employers liability isn't required, but it's still helpful. Having both gives your business more complete protection against employee injury claims.
The good news is that most workers' comp policies include both types of coverage. If you have a workers' compensation policy through a private insurer, it probably includes ELI. If you live in a monopolistic state, you should talk to a private insurer about ELI coverage, which isn't available through the state fund.
If you're unsure how much workers' comp you need or whether employers liability applies to your business, give us a call. Our team of experts can help explain what's included in your workers' compensation policy. Talk to an agent or start a quote today.
