Employer’s liability is a type of insurance that helps business owners cover the costs of litigation that may arise after an employee is injured or ill on the job. A business owner who does not have liability insurance will have to pay legal fees out of their own pocket. In many cases, this coverage is included in a workers’ compensation insurance policy; in other cases, business owners may need to purchase this policy separately. Workers’ compensation lawyer Nathaniel F. Hansford recommends that all business owners make sure to have this coverage, as legal fees can become quite high, jeopardizing the very survival of the business.
Why should businesses have employer liability insurance?
Small business owners need employer liability insurance because it is useful to protect them from lawsuits from employees who are injured or sick on the job. A business without employer liability insurance will have to be liable for attorneys’ fees, judgments and settlements.
How does this coverage work?
Almost all states require business owners to have workers’ compensation insurance. This policy provides benefits to employees who need to recover from illness or injury sustained on the job and helps them cover lost wages, medical bills, and ongoing medical care.
However, even with a workers’ compensation policy in place, workers can sometimes sue their employers if they feel their medical expenses and wages are not being fairly compensated. Depending on the state in which the business is located, the employer must find out if this liability coverage is included in their workers’ compensation policy or if it is something they will have to purchase separately.
What are the benefits of an employer liability policy?
An employer’s liability insurance policy helps cover various types of claims. Among them:
Litigation for indirect bodily injury “These are claims that non-employees can file when they believe they have been affected by an employee’s illness or injury.
Losing consortium lawsuits “These lawsuits are usually filed by spouses who claim they lost all family benefits because their spouse got sick or was injured at work.
Third Party Claims – They are brought by an employee who has suffered an illness or injury at work.
Double capacity claims – This occurs in cases where the employer has a secondary relationship with the employee.
What is the difference between an employer’s liability policy and workers’ compensation?
The main difference between both policies is that while workers’ compensation helps workers pay their medical bills and expenses, an employer’s liability insurance policy helps the employer pay their legal fees.
Why should a business owner have employer liability insurance?
Here are a few reasons why employers should have this type of insurance:
Be in accordance with the law
As an employer, you demonstrate integrity by having workers’ compensation and employer’s liability insurance. This serves to strengthen your business reputation and motivate your employees.
This shows that you care about your employees.
By showing your employees that you care about them and their well-being, employees feel protected and safe at work and improve mental health.
Provides coverage for legal costs
Legal fees can skyrocket quickly, but employer liability insurance provides protection against unexpected financial burdens.