Key Takeaways
- Protects employers from employee lawsuit costs.
- Covers injuries beyond standard workers' compensation.
- Includes legal defense and settlement expenses.
- Policy limits vary; often required by law.
What is Workers' Compensation Coverage B?
Workers' Compensation Coverage B, also called Employers' Liability Insurance, protects employers from lawsuits by employees or their families for work-related injuries or illnesses not fully covered under Coverage A. It covers legal defense costs, settlements, and judgments beyond the statutory benefits provided by Coverage A, such as claims alleging employer negligence. This coverage is crucial for businesses navigating the complexities of the labor market and managing employee-related risks.
Key Characteristics
Coverage B complements Coverage A with specific legal protections and financial limits. Key features include:
- Legal defense coverage: Pays for attorney fees and court costs in employee injury lawsuits.
- Liability beyond statutory benefits: Covers damages not included under no-fault workers' compensation laws.
- Bodily injury by accident or disease: Includes single incidents or occupational illnesses like respiratory diseases.
- Policy limits: Usually set per accident and per employee, with aggregate limits for disease claims.
- Mandatory purchase: Required in most states, often bundled with Coverage A or added as an endorsement.
How It Works
Coverage B activates when an injured employee files a lawsuit against their employer for damages exceeding the benefits under Coverage A. Unlike the no-fault structure of workers' compensation, this coverage requires proof of employer liability, such as negligence. It reimburses legal expenses, settlements, and judgments within policy limits, reducing your financial exposure.
Employers usually obtain Coverage B through standard workers' compensation policies, but in monopoly states, separate private coverage or "stop-gap" endorsements may be necessary. Understanding your policy's earned premium and limits helps ensure adequate protection against costly claims.
Examples and Use Cases
Industries with higher injury risks often prioritize Coverage B to guard against lawsuits and ensure contract compliance. Examples include:
- Airlines: Delta and American Airlines manage workforce risks by securing employers' liability coverage alongside their workers' compensation policies.
- Construction: Companies require higher limits due to frequent occupational injuries and contractual obligations.
- Manufacturing: Employers facing potential long-term disease claims often invest in comprehensive Coverage B protections.
Important Considerations
When selecting Coverage B, consider your business structure, such as whether you operate as a C corporation, which may affect liability exposure. Also, evaluate state-specific requirements and exclusions carefully, as general liability insurance typically does not cover employee injury claims.
Employers should maintain strong safety programs and regularly review policy terms to balance cost and coverage. For businesses seeking to optimize cash flow while managing risk, exploring options like the best low-interest credit cards may provide additional financial flexibility.
Final Words
Workers' Compensation Coverage B safeguards your business against costly lawsuits beyond standard benefits, covering legal expenses and additional damages. Review your current policy limits and consult an insurance professional to ensure adequate protection against potential employer liability claims.
Frequently Asked Questions
Workers' Compensation Coverage B, also known as Employers' Liability Insurance, protects employers from lawsuits by employees or their families for work-related injuries or diseases not fully covered under Coverage A. It covers legal defense costs, settlements, and judgments up to policy limits.
Coverage A provides no-fault statutory benefits like medical expenses and lost wages, while Coverage B covers liabilities beyond those benefits, such as employee lawsuits for negligence and claims not covered by state statutes. Coverage B requires proof of employer liability, unlike the no-fault Coverage A.
Coverage B covers bodily injury by accident, such as falls, and bodily injury by disease, like long-term occupational illnesses. It also includes claims from employees' families for loss of consortium and covers legal defense, settlements, or judgments arising from employment-related incidents.
Yes, typical policy limits include $100,000 per accident for bodily injury, $100,000 per employee for bodily injury by disease, and an aggregate limit of $500,000 for all disease claims during the policy period. Employers can often purchase higher limits, especially in high-risk industries.
Coverage B is crucial because it protects employers from costly lawsuits that go beyond the statutory benefits provided by Coverage A. It helps cover legal fees and damages from employee claims related to negligence or other liabilities not covered under the no-fault system.
In most states, Coverage B is mandatory and typically bundled with Coverage A in the workers' compensation policy. This ensures employers are protected from various types of employee claims and lawsuits related to workplace injuries or diseases.
Yes, Coverage B includes protection against related claims such as loss of consortium brought by an employee’s spouse or child. This additional coverage helps shield employers from broader litigation risks tied to workplace injuries.
