What does Employers' liability insurance cover?
When workers are not satisfied with the compensation provided for injuries, illness or death at workplace, they can sue the employer. This can impact the business financially. Employers’ liability insurance comes to the aid of employers by providing financial support for legal costs. In this blog, let us understand what is Employers’ liability insurance and how it works.
How Employers' liability insurance works
Employers’ liability insurance is a type of insurance that protects businesses from financial losses if employees file lawsuits alleging negligence that led to workplace illness or injuries. It covers the expenses related to lawsuits, legal expenses, compensation to workers, etc.
Now that you know Employers’ liability insurance meaning, you must also know how it works.
Most private sector employers have Worker’s compensation insurance, which covers medical expenses and lost wages for employees if they sustain injuries or fall sick at workplace. If the employees feel that they have not been adequately compensated, they can file lawsuits. This is where Employers’ liability insurance coverage steps in. It covers the loss not covered in Worker’s compensation insurance, reducing the financial burden on the employer.
Who requires Employers' liability insurance
- Businesses working in hazardous industries
- Businesses or employers that want to stay financially protected against losses due to lawsuits filed by employees
- Businesses at risk of workplace injuries. Even if the employer has safety measures in place, a single accident can impact the business if the employee feels the compensation has not been adequate and sues the employer
Limitations of Employers' liability insurance
Employers’ liability insurance comes with certain limitations, such as:
- If an employer purposefully aggravates an employee’s work-related injury or illness, liability insurance will not cover the compensation to be paid to the employee. If the employee wins the legal battle, the employer has to bear the medical expenses
- Some insurers may not cover punitive damages for negligence
- If the employee gets injured or falls sick outside the workplace, the policy will not cover the claim
Conclusion
Even after providing compensation to employees for workplace-related accidents, employers still face the risk of lawsuits if employees feel the compensation is not adequate. Employers’ liability insurance helps protect employers from financial losses arising due to lawsuits.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It is advised to verify the currency and relevance of the data and information before taking any major steps. Please read the sales brochure / policy wordings carefully for detailed information about on risk factors, terms, conditions and exclusions. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.