Employer’s liability is a type of insurance that helps business owners cover the costs of a lawsuit that may result after an employee has suffered an injury or becomes ill at work. A business owner who does not have liability insurance would have to pay for the legal costs out of their own pocket. In many cases, this coverage is included in a workers’ compensation insurance policy; in others, business owners may have to acquire this policy separately. Workers’ compensation lawyer Nathaniel F. Hansford recommends that all business owners make sure to have this coverage since legal costs can become quite expensive, putting the very survival of the business at risk.

Why should businesses have employer’s liability insurance?

Owners of small businesses need to have employer’s liability insurance because it is useful in protecting them from lawsuits by employees who get injured or become ill at work. A business without employer liability insurance would have to be responsible for attorney’s fees, judgments, and settlements.

How does this coverage work?

Almost all states require business owners to carry workers’ compensation insurance. This policy provides benefits to employees who need to recover from illnesses or injuries they sustained at work, and it helps them cover the costs of lost wages, medical bills, and ongoing medical care.

However, even when there is a workers’ compensation policy, workers may sometimes sue their employers if they believe that their medical expenses and wages are not being compensated fairly. Depending on the state where the business is located, an employer should find out whether this liability coverage is included in their workers’ compensation policy or if this is something that they would have to purchase separately.

What benefits does an employer’s liability policy provide?

An employer’s liability insurance policy helps cover different types of claims. Among them:

Consequential bodily injury lawsuits – These are claims that a non-employee can file in cases where they believe they have been affected by an employee’s illness or injury.

Loss of consortium lawsuits – These claims are usually filed by spouses who claim they have lost all marital benefits because their spouses have become ill or suffered an injury at work.

Third-party lawsuits – These are brought by an employee who has sustained an illness or injury at work.

Dual-capacity lawsuits – These happen in cases where the employer has a second relationship with the employee.

What is the difference between an employer’s liability policy and workers’ compensation?

The main difference between both policies is that while workers’ compensation helps employees pay their medical bills and expenses, an employer’s liability insurance policy helps the employer pay their legal costs.

Why should a business owner carry employer’s liability insurance?

Here are some reasons why employers should have this type of insurance:

To Be Compliant With the Law

As an employer, you show trustworthiness both by having workers’ compensation and employer’s liability insurance. It serves to enhance your reputation as a business and motivates your employees.

It Shows You Care About Your Employees

Demonstrating to your employees that you care about them and their well-being makes employees feel protected and safe at work and improves mental health.

Provides Coverage for Legal Fees

Legal fees can grow quickly but having employer’s liability coverage provides protection against an unexpected financial burden.