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16.7 Part Two – Employers Liability Insurance

Employers Liability insurance covers bodily injury and other damages for which the employer is legally liable but are not covered by Workers’ Compensation or occupational disease laws. It protects the employer against lawsuits arising from workplace injuries, including:

  • Third-party-over action – A third party sued by an injured employee seeks reimbursement from the employer.
  • Doctrine of Dual Capacity – An employee sues the employer as the manufacturer of a product that caused the injury, rather than as the employer.
  • Loss of consortium – An employee’s spouse sues the employer for the loss of companionship, care, support, or household services.
  • Consequential injuries – Injuries sustained by the dependents of an injured employee.

An Insurance Story

K, an employee at Coffee Café, slips on spilled milk at work and suffers a back injury. Workers’ Compensation covers K’s medical expenses and lost wages because the injury is a temporary total disability. If K’s spouse later sues Coffee Café for lost income or for injuries sustained while caring for K, those damages may be covered under the employer’s Employers Liability insurance.

How This Insurance Applies​

Employers Liability insurance covers bodily injury by accident or disease, including resulting death, when the injury arises out of and occurs during the employee’s work for the insured. Accidents must occur during the policy period, and occupational diseases must be caused or aggravated by employment, with the employee’s last exposure occurring during the policy period.

Any lawsuit seeking damages for bodily injury must be filed in the United States, its territories or possessions, or Canada.

We Will Pay​

The insurer pays all damages the insured is legally obligated to pay, up to the policy limit. Covered damages include those arising from third-party-over action, the Doctrine of Dual Capacity, and claims for care, loss of services, and consequential injury suffered by an injured employee’s spouse, child, parent, or sibling. Loss of services refers to the loss of household contributions, such as childcare or household chores.

Example

Under the Doctrine of Dual Capacity, an employee injured by medical treatment provided by the employer may sue the employer in its role as a healthcare provider rather than as the employer. Such claims may be covered by Employers Liability insurance.

Exclusions​

The policy does not cover:

  • Liability assumed under a contract
  • Punitive or exemplary damages for employing an employee in violation of the law
  • Bodily injury to an employee who was employed in violation of the law
  • Obligations covered by Workers’ Compensation, occupational disease, unemployment compensation, or disability benefits laws
  • Bodily injury intentionally caused by the insured
  • Bodily injury occurring outside the United States, its territories or possessions, or Canada, except for injuries to U.S. or Canadian residents temporarily outside those areas
  • Damages arising from coercion, criticism, defamation, evaluation, reassignment, discipline, harassment, humiliation, termination, or discrimination against an employee
  • Bodily injury arising from employment subject to federal jurisdiction
  • Fines or penalties imposed for violating federal or state law
  • Damages payable under the Migrant and Seasonal Agricultural Worker Protection Act

We Will Defend​

The insurer has the duty to defend any claim covered under Part Two at its own expense. The insurer also has the right to investigate and settle covered claims.

We Will Also Pay​

The insurer also pays the same supplementary payments provided under Part One.

Other Insurance​

If other insurance also covers the loss, the insurer pays its share of the damages on a contribution by equal shares basis.

Limits of Liability​

The limits of liability shown on the Information Page are the maximum amounts the policy will pay for damages.

  • Bodily Injury by Accident – Applies to each accident. Standard limit: $100,000.
  • Bodily Injury by Disease — Policy Limit – Applies to all occupational disease claims during the policy period. Standard limit: $500,000.
  • Bodily Injury by Disease — Each Employee – Applies to each individual employee with an occupational disease. Standard limit: $100,000.

Recovery From Others (Subrogation)​

The insurer has the right to recover payments from any person or organization legally responsible for causing the employee’s injury.

Actions Against Us​

The insured must comply with all policy terms before taking legal action against the insurer. Before suing the insurer, the amount the insured owes must be established either with the insurer’s consent or by a final court judgment.

The insured’s bankruptcy does not relieve the insurer of its obligations under the policy.