Workers’ compensation and employer’s liability coverage are usually purchased together under a company’s overall business insurance policy. To understand the difference between workers’ comp and employer’s liability, let’s review what each plan covers.
Workers’ compensation provides coverage for employees that are injured while working, without regard to fault. It is a state-mandated program and a form of no-fault insurance. While the employee must show that they were hurt while performing the duties of his or her job, they do not have to prove that the employer was negligent. Workers’ comp will cover the costs of medical expenses such as treatments and medication, as well as partial wage loss. It does not cover any costs associated with pain and suffering.
Employer’s liability provides coverage for an employer in situations where an employee feels that the workers’ comp provided was not adequate to cover the cost of medical bills or lost wages, and that the employer was negligent. In these lawsuit driven situations, the employee must still show that his or her injury took place while doing their job, but also that it would not have happened if it weren’t for negligence on the part of the employer.
Employer’s liability insurance covers all kinds of employer’s liability claims, unless the policy specifically excludes them. Four of the most common lawsuits involve the following:
- Third party cases – In these cases, another party was held liable for the employee’s injury and in turn, they are filing a lawsuit against the employer. An example is if you own a construction business and an employee was hurt using a machine that was not serviced regularly. The employee sues the manufacturer of the machine, who then sues the employer for contributory negligence.
- Loss of consortium – An injured employee’s spouse files this type of lawsuit. These damages typically fall into one of three categories – damages for loss of services, damages for loss of support, and damages for loss of quality in the marital relationship which includes acts like providing affection or emotional support.
- Dual-capacity suits – An employee can file this lawsuit when a product their employer makes is the cause of their injury. This means the company is liable both as an employer and a manufacturer.
- Consequential bodily injury – If the employee’s family members suffered bodily injury themselves as a result of the workplace injury, they could sue the business. For example, if an employee was injured using a machine and their spouse suffered an aneurysm from stress, the employer may be sued for those damages, as well.
When these claims arise, employer’s liability insurance can cover a company’s legal defense fees, settlements, damages and judgments, and other court costs.
To prove a claim, an employee must show that the employer was negligent in some way. Proof of negligence requires:
- The employer had a duty to protect their workers from harm
- Actions or lack of actions breached that duty
- An injury occurred as a direct result of an employer’s breach of duty
- The employee suffered tangible harm as a result of the injury
Consult a Workers’ Compensation Lawyer
If you have been involved in a workplace accident, consult with a workers’ compensation attorney to stand by your side throughout the process. He or she can help you determine if the expenses of your claims warrant a lawsuit under the employer’s liability coverage.