Workers’ Compensation Coverage B (Employers’ Liability)

What it is

Workers’ Compensation Coverage B—commonly called employers’ liability—is the portion of a workers’ compensation program that responds to additional damages when an injured employee sues the employer (for example, alleging employer negligence). Part A of a workers’ compensation policy satisfies state statutory requirements; Part B provides supplemental protection above and beyond those statutory benefits.

How it works

• Part A pays statutorily required benefits (medical bills, wage replacement, rehabilitation) according to state law.
• Part B (employers’ liability) responds when an injured employee or their family pursues damages beyond statutory benefits, typically through litigation alleging employer fault or negligence.
• Payments under Part B are handled by the insurer and are subject to the limits and terms of the policy.

What it covers

Depending on state law and the policy, Coverage B can provide:
– Legal defense and settlements or judgments when an employer is sued.
– Payments for damages not covered by statutory workers’ compensation (for example, certain pain-and-suffering claims or liability arising from employer negligence).
– Continued coverage for medical expenses, a portion of lost wages (varies by state and policy), lump-sum disability or disfigurement awards, and death benefits if applicable.

Typical policy limits (examples)

Limits vary by insurer and state, but a standard employers’ liability schedule may include:
– Bodily injury by accident: $100,000 each accident (example)
– Bodily injury by disease: $100,000 each employee; $500,000 policy aggregate (example)

Check your specific policy and state requirements for exact limits and options.

Who needs Coverage B

• Most states require employers to carry workers’ compensation insurance; Coverage B is part of a complete workers’ comp program.
• Many states require coverage when an employer has three or more employees (this threshold varies by state and may include certain subcontractor owners and their employees).
• Businesses operating in monopolistic states (where the state provides workers’ compensation) may need to obtain employers’ liability as an endorsement through another insurer.

Special considerations

• Employers’ liability claims can be large; many businesses carry umbrella or excess liability insurance to increase protection above primary policy limits.
• In monopolistic-state scenarios, secure employers’ liability coverage through the appropriate provider or endorsement.
• Review policy exclusions, limits, and how wage replacement and medical benefits interact with statutory state benefits.

Example

If an employee reports a faulty exposed wire and the employer fails to repair it, then the employee is electrocuted and suffers serious injury, Coverage B would typically respond to lawsuits alleging employer negligence. Coverage B could pay amounts above the statutory workers’ compensation benefits, including legal defense and any awarded damages subject to policy limits.

Conclusion

Employers’ liability (Coverage B) is an essential complement to statutory workers’ compensation (Part A). It protects employers from additional legal and financial exposure when injuries involve alleged negligence or other claims beyond standard statutory benefits. Review state rules and policy limits with your insurance advisor to ensure appropriate coverage.