Employers liability coverage is an insurance policy that helps pay the costs a business may face if it is sued over a work-related injury or illness an employee suffers. It is designed to deal with expenses that fall outside the realm of the workers compensation statutes or general liability insurance, providing additional protection against financial loss for the company or business. Employers liability coverage is typically part of a workers’ compensation insurance policy, but for employers in monopolistic states who get workers’ compensation coverage through a state fund, employer’s liability insurance isn’t included in their policy. Businesses in these four states must buy a separate policy: North Dakota, Ohio, Washington, and Wyoming.

Employers liability coverage helps cover the legal costs associated with workplace injuries or illness, including lawyer’s fees and any costs of a settlement or judgment. It also covers third-party action lawsuits, such as when a forklift operator is injured at a company warehouse and sues the forklift manufacturer, which in turn sues the operator’s employer. However, it does not cover every situation, such as employees who were illegally hired or workers whose injuries were self-inflicted.

Employers liability coverage is different from workers’ compensation insurance, which provides employees benefits to help them recover from work-related injuries or illnesses, helping cover their costs for medical bills, ongoing care, and lost wages. If an employee sues their employer, employer’s liability coverage can help cover the legal costs, while workers’ compensation insurance pays for expenses such as an employee’s medical bills resulting from a workplace injury or illness an employer is obligated to pay under workers’ compensation laws.

In summary, employers liability coverage is an important policy for small business owners to protect them from lawsuits related to employee work-related injuries or illnesses that fall outside the realm of workers compensation statutes or general liability insurance. It helps cover legal costs associated with workplace injuries or illness and is typically part of a workers’ compensation insurance policy.