For businesses, protecting employees from workplace injuries is both a legal and ethical responsibility. That’s where Workers’ Compensation Insurance comes in. However, many business owners overlook another critical aspect of coverage—Employer’s Liability Insurance—which is becoming increasingly scrutinized, with organizations now requiring $1 million limits as a standard. Below, we’ll break down what each policy covers, why Employer’s Liability is more important than ever, and how BGES Group can help businesses secure the right coverage.
Workers’ Compensation Insurance: What It Covers
Workers’ compensation is a state-mandated insurance policy that provides financial benefits to employees who suffer work-related injuries or illnesses. Regardless of who is at fault, this insurance ensures employees receive medical treatment and wage replacement while protecting employers from lawsuits.
Key Coverages of Workers’ Compensation Insurance
- Medical Expenses – Covers all necessary medical treatments, including doctor visits, hospital stays, physical therapy, prescriptions, and rehabilitation.
- Lost Wages – Provides partial wage replacement for employees who cannot work due to a work-related injury or illness.
- Disability Benefits – Covers temporary or permanent disabilities, whether partial or total, that prevent an employee from returning to work.
- Death Benefits – Provides financial support to the dependents of an employee who dies due to a work-related incident.
While workers’ compensation insurance is comprehensive, it does not fully shield employers from liability. That’s where Employer’s Liability Insurance comes into play.
Employer’s Liability Insurance: A Crucial Layer of Protection
Employer’s Liability Insurance is included in most workers’ compensation policies but serves a distinct purpose: It protects businesses against lawsuits filed by employees or their families for work-related injuries that aren’t fully covered by workers’ comp.
What Employer’s Liability Covers
- Third-Party Lawsuits – If an injured employee sues a third party (such as a manufacturer of faulty equipment), that third party may, in turn, sue the employer.
- Loss of Consortium Claims – If an employee’s injury impacts their family, their spouse may file a lawsuit for loss of companionship or household contributions.
- Consequential Bodily Injury – If a family member of the injured employee suffers illness or injury as a direct result of the employee’s injury, they may sue the employer.
- Dual Capacity Lawsuits – If an employee is injured by a product manufactured by their employer, they may sue the company as both their employer and as the manufacturer.
These claims can lead to significant financial exposure beyond standard workers’ compensation benefits, making Employer’s Liability Insurance a crucial safeguard.
Why More Organizations Require $1 Million Employer’s Liability Limits
A decade ago, many businesses carried minimum Employer’s Liability limits of $100,000 per employee injury, $500,000 per disease policy limit, and $100,000 per disease per employee. Today, more companies, contractors, and hiring firms are demanding $1 million limits or higher—but why?
- Rising Litigation Costs
Legal costs have soared in recent years, making even small lawsuits expensive. Many settlements exceed six or seven figures, so businesses need higher coverage limits to avoid catastrophic financial losses. - Increased Workplace Injury Claims
Workplace injury lawsuits are rising, particularly in high-risk industries like construction, manufacturing, and transportation. Organizations want to ensure their subcontractors and vendors have sufficient coverage to avoid being pulled into costly lawsuits. - Contractual Requirements
Many large corporations and government contracts now require vendors to carry $1 million in Employer’s Liability coverage before they can work on a project. Businesses without adequate limits risk losing out on valuable contracts. - Third-Party Lawsuits Are Becoming More Common
More third-party over-action claims are being filed, where injured employees sue equipment manufacturers, general contractors, or property owners—who then sue the employer for contribution. High Employer’s Liability limits help businesses absorb these costs. - Coverage Gaps Could Bankrupt a Business
Without sufficient limits, a single claim could financially devastate a small or mid-sized business. Many organizations are now proactively increasing their limits rather than taking that risk.
Real-World Examples of Employer’s Liability Claims
To illustrate why high limits are essential, here are a few real-world scenarios where Employer’s Liability Insurance would be critical:
Case #1: The Construction Worker Injury
A subcontractor’s employee falls from scaffolding at a job site and suffers a permanent disability. The injured worker receives workers’ compensation but then sues the general contractor. The general contractor, in turn, sues the subcontractor for not maintaining a safe work environment. The subcontractor’s Employer’s Liability Insurance helps cover the settlement costs.
Case #2: Defective Equipment Lawsuit
A warehouse worker loses a finger while using a defective machine. The worker sues the machine manufacturer, but the manufacturer claims improper maintenance by the employer caused the injury. The employer now faces a third-party over-action lawsuit, which Employer’s Liability Insurance helps defend against.
Case #3: Family Member’s Injury Claim
An employee contracts a work-related disease and unknowingly exposes their spouse, who becomes ill as well. The spouse sues the employer for negligence. Employer’s Liability Insurance steps in to cover legal costs and settlements.
How BGES Group Can Help Your Business
At BGES Group, we specialize in helping businesses find the right Workers’ Compensation and Employer’s Liability coverage to meet their industry’s demands. Whether you’re a contractor, manufacturer, trucking company, limousine service, or small business owner, we can:
✔ Secure competitive pricing for your workers’ compensation coverage
✔ Ensure your Employer’s Liability limits meet contract requirements
✔ Find solutions for high-risk industries
✔ Help businesses avoid costly claims and lawsuits
✔ Provide expert advice on risk management and compliance
Take Action Today – Contact BGES Group
With workplace injury lawsuits on the rise and more organizations demanding higher coverage limits, now is the time to review your workers’ compensation policy and Employer’s Liability limits.
Contact Gary Wallach at BGES Group today:
📞 914-806-5853
📧 bgesgroup@gmail.com
🌐 www.bgesgroup.com
Don’t wait until you’re faced with a lawsuit—protect your business now with the right coverage!