Key Takeaways:
- Employer's Liability Insurance (ELI) fills the gaps not covered by workers' compensation, protecting against significant financial risks. It’s vital for businesses, especially in high-risk industries.
- Unlike workers' compensation, which covers medical expenses and lost wages, ELI protects against lawsuits alleging employer negligence. It also includes coverage for legal defense and court judgments.
- It’s important to understand policy limits and exclusions: ELI does not cover claims related to intentional wrongdoing, discrimination, or other specific damages that are typically addressed by other policies.
Employer's Liability Insurance (ELI) protects businesses from legal claims that could arise due to workplace injuries or illnesses. While often connected to workers' compensation, ELI covers gaps that might otherwise expose a business to significant financial risk. Effective Certificate of Insurance Tracking Software ensures businesses remain compliant, preventing potential liabilities from slipping through the cracks.
How Does Employer's Liability Insurance Work?
ELI is an important safeguard for businesses, particularly for organizations in high-risk industries where the potential of workplace injuries or illnesses are significant.
It is designed to protect employers from the financial consequences of legal claims brought by employees who allege that their injuries or illnesses were caused by insufficient safety measures, improper training, or violations of workplace regulations on the part of the employer.
Legal requirements can vary depending on the jurisdiction and nature of the business. For example, if you conduct business in an industry with higher risk levels, you may be required to carry coverage. In most states, this insurance is included within a workers’ compensation policy—however, in North Dakota, Ohio, Washington, and Wyoming, it must be purchased separately.
How Does ELI Differ From Workers’ Compensation Coverage
While workers' compensation insurance covers medical expenses and lost wages without requiring the employee to prove fault, it doesn't shield employers from all potential liabilities.
This is where ELI comes into play. It complements workers' compensation by covering scenarios where an employee sues the employer for additional compensation beyond what workers' compensation provides.
Workers' compensation is a no-fault system mandated by law in most states, ensuring that employees receive benefits regardless of who caused the injury. ELI provides coverage when the employer's direct responsibility is in question. It typically includes legal defense costs, court settlements, and any judgments against the employer.
Do You Need ELI Coverage for Your Business?
This policy can be essential for businesses of all sizes, from small enterprises with a handful of employees to large corporations with a sizable workforce. Effective COI tracking is equally important to ensure compliance and mitigate potential risks.
Some of the most common industries for ELI include:
- Construction
- Manufacturing
- Healthcare
- Agriculture
- Transportation & Logistics
- Hospitality
- Retail
What Do ELI Policies Cover?
These policies typically protect against:
- Third-party lawsuits initiated by employees due to injuries or illnesses sustained on the job.
- Loss of consortium claims by spouses seeking compensation for the loss of marital benefits caused by an employee’s injury or illness.
- Consequential bodily injury lawsuits filed by non-employees who suffer harm due to an employee’s injury or illness.
- Dual-capacity lawsuits in which an employer holds an additional role, such as a product manufacturer or property owner, that relates to the employee’s injury.
What Are Common Limits & Exclusions of Coverage?
This policy does not cover intentional wrongdoing by an employer, such as deliberately causing harm or property damage. Workers' compensation claims are also excluded, meaning injuries sustained at work that fall under workers' compensation are not protected under this policy.
Claims such as discrimination, harassment, retaliation, violations of employee rights, and wrongful termination which would be protected under Employment Practices Liability insurance, are excluded.
Some policies also won’t cover injuries resulting from mental or emotional stress, self-inflicted injuries, incidents occurring while an employee is under the influence of drugs or alcohol, or damage to the employer's property.
Coverage limits are generally determined by factors such as employee count, business type, and risk level, with typical limits set at $100,000 per accident, $500,000 per policy, and $100,000 per employee.
Optimize Your Compliance & Risk Management Processes with bcs
Even with the best insurance policies in place, to effectively manage liability and ensure adequate compliance, it is essential to have a reliable system for tracking your insurance documentation. With advanced COI tracking software in place, you can prevent coverage gaps and shield your business by ensuring all your insurance requirements are met.
bcs is a premier COI tracking and vendor management solution providing both full-service and self-service options to streamline insurance tracking.
Our software ensures real-time transparency, highlights compliance discrepancies, and maintains up-to-date documentation to simplify your risk management, enabling you to focus on growing your business with confidence and peace of mind.
Contact bcs today to find out how our comprehensive solutions can help safeguard your business.
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