Employer’s Liability Insurance Coverage and Cost | Insureon (2024)

For employees, their workers’ compensation benefits cover medical bills arising from a work-related employee injury or illness. It can also offset some of an injured employee’s lost wages if they’re unable to work for a while.

For employers, the main benefit to workers’ comp is the protection from legal claims that employer’s liability insurance or EL insurance covers. If an employee files a work-related injury lawsuit against your business, this coverage can help pay for your legal defense.

Consider these examples of employer’s liability claims:

Employer’s liability is the legal responsibility of an employer to pay damages to an employee who suffers a work-related injury or illness, which can often result in an expensive lawsuit. Your employer’s liability insurance can help offset those legal costs, as well as any settlement.

Your employer’s liability insurance coverage is included in most workers’ compensation insurance policies, although it's excluded from state-run programs. Workers’ comp is required in almost every state for employers with one or more employees.

Employer’s liability insurance is included in most workers’ compensation policies, so the coverages are related but not the same.

Workers’ compensation insurance covers the medical expenses for an employee’s work-related injuries and illnesses, along with some of their lost wages.

Employer’s liability insures a business owner against lawsuits over an employee injury or illness.

Learn more about workers' compensation and employer's liability coverage limits.

Sole proprietors who have no employees typically aren’t required to carry employer’s liability coverage. They may have to carry workers’ comp insurance if they work in a profession with higher risk, such as construction and building trades.

If you’re self-employed or an independent contractor, you might need a workers’ comp policy to fulfill the terms of a contract.

Workers’ compensation can also come in handy if you have a work-related injury or occupational disease and are unable to work for a while. Your regular health insurance is unlikely to cover you for a work-related mishap.

In most states, your employer’s liability insurance is included in the workers’ compensation coverage you purchase from a private company.

In the monopolistic states of North Dakota, Ohio, Washington, and Wyoming, their workers’ compensation laws require employers to buy workers' comp insurance from a state fund. In 10 other states, employers have the option of buying their workers’ comp coverage from a state fund or the private market.

State-operated workers’ comp funds don’t include employer’s liability coverage. If you buy workers’ comp through a state fund you would need to buy a separate employer’s liability policy from an insurance company, to be protected against legal actions by your employees over a workplace injury or illness.

You might buy employer’s liability coverage as a separate policy, known as stop gap coverage, or as an add-on endorsem*nt to your general liability insurance.

If you’re in need of employer’s liability or workers’ compensation insurance, you can buy coverage from Insureon and get your certificate of insurance (COI), typically in less than 24 hours.

There are several options for saving money on workers’ compensation premiums.

If your business has few risks and a small number of employees, you might be eligible for a minimum premium workers' compensation policy. This offers the smallest premium an insurance company will sell a policy for, with the minimum amount of coverage.

Most workers’ comp premiums are based partially on your annual payroll figures. If your number of employees fluctuates throughout the year, you might opt for a pay-as-you-go workers' comp policy. Your monthly premiums would be based on how many employees you have within each month.

If you’re a sole proprietor and exempt from your state’s workers' comp requirements, yet you need proof of workers’ comp insurance to qualify for contracts, a workers’ comp ghost policy would give you that proof of insurance at a minimal cost. Just be aware that a ghost policy only offers proof of insurance, without any real coverage.

While similar in name, employer's liability insurance and employment practices liability insurance provide different coverages for employer-related risks.

Employer’s liability insurance offers financial protection against workers' compensation claims, employee lawsuits, and settlements for work-related injuries and illnesses.

It’s included with the workers’ comp insurance you buy from an insurance carrier or can be purchased separately if you get your workers’ comp coverage from a state fund.

Employment practices liability insurance (EPLI) covers the types of claims and settlements that are related to your employment practices, such as a violation of an employee’s rights or a hostile work environment.

ELPI isn’t included in your workers’ compensation insurance and is typically purchased by business owners and directors to protect themselves from these types of lawsuits.

EPLI coverage includes employee claims of: