What is employers liability insurance?

What is employers liability insurance?

Matt Crawford
By Matt Crawford
Nov 8, 2020
6 min read

Employers liability insurance helps protect your business from financial losses if an employee or third party files a lawsuit against you because of a work-related injury, illness or death.

If you don’t have this type of coverage, you’ll be responsible for paying for costs related to the lawsuit out of pocket. This could amount to a significant financial loss after a serious accident.

How does employers liability insurance work with Workers’ Compensation?

If you own a business and have employees, you’re probably required by your state to have workers’ compensation insurance. In most states, workers’ comp provides two types of protection:

Medical and lost wage

Medical and lost wage coverage helps pay for medical bills and lost wages if you or an employee gets hurt or sick on the job. It’s a no-fault system, which means benefits are paid no matter who’s responsible for the accident as long as it’s not intentional.

Employers liability

Employers liability coverage kicks in if someone files a lawsuit because they believe the employer’s actions (or failure to act) caused or significantly worsened the employee’s injury or illness.

It can pay for settlements, damages or judgments, as well as court costs and legal feels, which can add up quickly during court proceedings.

How employers liability insurance protects you from lawsuits

There are five main types of lawsuits employers liability insurance can help protect against. You’ll need to get to know some unavoidable legal jargon to learn more about your liability risks in this section, but you’ll leave well informed about some of the most common types of claims that employers liability insurance covers.


If an employee gets hurt on the job because you didn’t take adequate steps to protect them, they may file a lawsuit and sue you for damages.

Let’s say one of your employees is working on a construction site and gets hit in the head by a rock that falls from scaffolding. Your workers’ comp policy should cover the employee’s medical bills and lost wages. But suppose the employee sues you for negligence because he says you didn’t provide appropriate safety equipment, and he has a permanent brain injury. In that case employers liability insurance pays for expenses related to the claim.

Consequential bodily injury

Workplace injuries don’t just affect the employee who’s injured. They affect the people who care for them, as well.

If the spouse of an employee gets sick or hurt as a result of caring for the injured worker, they may sue you. For example, a spouse claims they injured their back while helping the employee get in and out of the car for physical therapy appointments.

Third-party over action

If an employee sues a business because of a workplace injury they sustained, and that company sues you, employers liability insurance can cover the claim. Let’s say the loader on a backhoe at a construction site strikes and injures one of your employees. The employee may sue the backhoe manufacturer, claiming the backhoe malfunctioned.

If the manufacturer sues you, claiming you didn’t take proper care of the equipment, and that’s why it malfunctioned, employers liability insurance can help cover costs.

Dual capacity

This one is a double whammy. If one of your employees is injured by a piece of equipment you produce, the employee can sue you as the employer and the equipment manufacturer.

Loss of consortium

If an employee’s family member experiences a loss due to the employee’s injury or death, they may file a loss of consortium claim against you.

Compensation for these types of claims is above and beyond the disability and death benefits the family may receive from the workers’ compensation policy.

Who needs employers liability insurance?

Any business that wants protection from a significant financial loss due to a work-related injury or illness needs employers liability insurance. Even if you have strict safety protocols in place, accidents happen.

In fact, there were 2.8 million nonfatal workplace injuries and illnesses and 5,250 workplace fatalities reported by private businesses in the United States in 2018. A single accident can impact your bottom line if you’re not adequately insured.

If you already have a workers’ compensation policy, you likely have employers liability insurance coverage because it’s included in nearly all standard workers’ compensation policies in most states.

How to get an employers liability insurance quote

If you don’t already have coverage, getting an employers liability insurance quote from Next Insurance is simple. It’s a part of every workers’ comp policy we sell.

Our online application makes it easy to identify who (e.g., owners, employees, subcontractors) needs to be included in your policy, so you have adequate coverage.

The entire process typically takes less than 10 minutes. When you select the policy that’s right for you, you’ll get immediate access to your certificate of insurance

Our U.S.-based, licensed insurance advisors are available to answer all your questions if you need help.

How Next Insurance helps business owners get insurance

We're committed to helping small businesses get the insurance coverage they need to protect themselves from financial losses. We offer a variety of insurance packages to 1,100+ types of businesses.

Our coverage options include general liability, workers compensation, commercial auto and professional liability insurance (also known as E&O insurance).

Because every business has different risks, we work with you to create a cost-effective insurance package that’s customized to fit your needs and address your unique exposures.

Get a free instant quote online today.

What is employers liability insurance?


matt crawford
About the author

Matt Crawford leads NEXT's content team. He's a small business insurance specialist and has worked with business owners throughout his career as a community journalist and content marketer.

You can find him at one of his many favorite local restaurants in the San Francisco Bay Area when he's not at work.

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