What is employers liability insurance?

Learn how this workers’ comp insurance benefit can help shield your business from common lawsuits

Matt Crawford
By Matt Crawford
Published Aug 15, 2023
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Nov 2020 4

Employers liability insurance is a part of workers’ compensation insurance. It can help protect your business from financial losses if an employee files a lawsuit against your business because of a work-related injury or illness.

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

Jump ahead to learn more about:

What does employers liability insurance cover?

Employers liability coverage can help protect against five main types of lawsuits:

1. Negligence claims

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 cooks suffers a burn in your restaurant kitchen. Your workers’ comp policy should cover the employee’s medical bills and lost wages.

But suppose the employee suffered a permanent injury and sues you for negligence because they say you didn’t provide a safe kitchen. In that case, employers liability insurance could help pay for expenses related to the claim.

2. Consequential bodily injury claims

Workplace injury doesn’t just affect the employee. It could also 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 helping the injured employee out of the car for physical therapy appointments. Employers liability insurance could help pay for expenses related to the claim.

3. Third-party over action lawsuits

If an employee sues a business because of a workplace injury, and then that company sues you, employers liability insurance may help cover the claim.

Let’s say the loader on a backhoe injures one of your employees. The employee may sue the backhoe manufacturer for damages. But then the backhoe manufacturer may sue you, claiming you didn’t properly care for the equipment.

These lawsuits do happen. And if they do, employers liability coverage could help you cover the costs.

4. Dual capacity lawsuits

In some states, if one of your employees is injured by a piece of equipment you produce, you may be responsible for damages to the employee in two ways: First in your role as the employer, and then again in your role as the equipment manufacturer.  Employers liability coverage may help protect you in your role as the equipment manufacturer from additional hefty damages.

5. Loss of consortium claims

If an employee’s family 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.

How much is employers liability insurance?

Employers liability insurance is included with NEXT’s workers’ compensation insurance policy.

Insurance quotes are free, easy, and completely customized for your business in under 10 minutes. Buy online and you’ll get immediate access to your certificate of insurance and 24/7 access to your policy, help and support.

Your exact cost will vary based on:

  • The number of employees at your business
  • Your payroll
  • Location of your business
  • Your business operations
  • The job functions of your employees
  • Claims history

Learn more about workers’ compensation costs or start a free quote.

How does employers liability insurance work with Workers’ Compensation?

If you own a business and have employees, you might be required by your state to carry workers’ compensation insurance. And in most states, employers liability insurance is already a part of your workers’ compensation policy.

Workers’ comp can help provide business owners protection for:

  • Medical expenses, including examinations, treatments and rehabilitation.
  • Lost wages to give employees time to recover from an injury before returning to work.
  • Survivor and death benefits to support families by helping to cover funeral costs and income replacement.
  • Retraining to help employees who need to learn skills and enter a new field.
  • Benefits for permanent injury for employees who can no longer work due to injury.
  • Employers liability coverage to help protect your business from financial losses if an employee files a lawsuit against you.

Learn more about what’s covered by workers’ comp insurance.

How NEXT helps small business owners

NEXT is committed to helping small businesses get the insurance coverage they need to protect themselves from financial loss. We serve over 1,300+ types of businesses with coverage options including:

Get a free instant quote.

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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