Before we begin, It is important to understand that Workers Compensation policy is unlike any other policy, it is actually a national program and in most states the law requires that employers carry Workers Compensation. This policy is not optional. You will often hear it being characterized as “statutory”, which means it is in reference to the laws and and regulations surrounding Workers Comp. For most other coverages like GL, excess, etc. the insured actually gets to choose the amount, the limits, details of the coverage, but Workers Comp is different. The amount of coverage is mostly dictated by the state of where the insured company is.
The government created this statutory Worker’s Comp insurance program to protect both the employees and the employers. In case of an injury, an employee gets compensated and gets medical expenses taken care of and employers don’t have to risk huge incentives. It’s a win-win.
So statutory Workers Compensation is a no fault system, meaning that the employee doesn’t have to prove that the employer is at fault to receive benefits. In many states employers pays for Workers Compensations with insurance premiums paid to wide WC funds. And in other states employers are permitted to self insure and pay the claims themselves.
Why do we need Employers Liability?
Employers liability coverage provides coverage for work-related bodily injury or disease other than those covered by the workers compensation law.
IRM defines workers compensations as “ an insurance policy that provides coverage for an employer’s two key exposures arising out of injuries sustained by employees”.
The 2 key risks exposures are as follows:
Part 1 of the policy Workers Compensation covers the employers statutory liabilities under workers compensation law . It’s a policy that offers benefits as determinate by the state to an employee due to jobs relative injuries resulting from an accident or occupational disease such as medical expenses, loss wages, etc. This policy also includes death benefit, with the benefit being transferred for the employee’s family. Again a lawsuit or a prof of negligence is not required in order to obtain workers comp benefits.
Part 2 is the Employers Liability Coverage – which covers liability arising out of an employee work-related bodily injury that is not coverage by the workers compensation. Employers liability lawsuit typically involves one or more of the following claims:
Third party over action, loss of consortium, consequential bodily injury, or dual capacity suits.
On a certificate an agent needs to indicate whether or not the workers comp. policies apply on a per statute or OTHER. This indicates whether or not the WC policy meets the state requirement. Here are some examples that the OTHER box would be checked:
- The coverage exceeds state requirements
- The state does not have requirements for Workers Compensations. Most often seen in monopolistic states like ND< Ohio, Washington and Wyoming.
An agent should also include a YES OR NO in the exclusion box where indicates whether or not there is employees’ exclusions on the policy.
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