Is Employers' Liability Included In My Workers' Comp Policy?

When buying a Colorado workers’ comp policy to cover your butt and your business, it’s smart to confirm that you’re covered from all angles.  

As an employer, it’s crucial to guarantee that you’re protected if one of your employees suffers an injury on the job and sues you for compensation beyond what's covered by workers' comp. That’s where employers’ liability insurance (often known as EL) comes into play.

One of the most frequently asked questions our Client Care team at Cake receives is:

Can someone help explain what is covered in my workers’ comp policy? I need to be covered for workers comp, as well as employers’ liability.

Let’s take a closer look at the answer. 

What Is Employers’ Liability Insurance Anyway?

As you may already know, workers’ comp provides benefits to employees that have suffered a work-related injury or became disabled on the job. 

In contrast, employers’ liability insurance protects employers from covered financial loss when an employee or their family members suffer a work-related injury that’s not included in workers’ comp.

Employers only need to worry about or utilize employers’ liability insurance if the injury happens outside of workers’ comp’s scope of coverage. Employers’ liability is typically used to protect the business when the employer is sued for negligence, and if certain conditions are met.‍

The base limit required by Colorado state for employers’ liability compliance is $100,000 per occurrence for bodily injury, $100,000 per employee for bodily injury by disease and $500,000 aggregate. Insurance carriers can offer more in employers’ liability insurance than Colorado’s minimum compliance limit.   ‍

How Does Employers’ Liability Insurance Work?

Employers’ liability insurance is designed to protect employers by covering expenses not covered by workers’ comp insurance. Employers’ liability covers, but is not limited to, injury-related judgments and fees, such as those awarded for pain and suffering.

It’s important to note that payment limits for employee injuries are statutory under workers’ comp and are not at all related to employers’ liability limits. 

What Types of Claims Are Covered By Employers’ Liability Insurance?

Third-Party Action

In addition to suing their employer, injured workers can sue a third party related to their injury—this is called a third-party-over action lawsuit.  The third-party could then respond by suing you, the employer, to cover their loss.

For example, if an employee was injured using machinery at work, they can opt to sue the equipment manufacturer. The manufacturer would, in turn, sue you.‍

Loss of Consortium

This lawsuit is typically filed by the spouse of an injured employee. The spouse can sue an employer for negligence or intentional action that resulted in the employee no longer being able to provide their family with the same relationship as before due to suffering severe and permanent injuries or death. ‍

Dual-Capacity Suit

A dual-capacity lawsuit can be filed if an employer of the injured employee manufactures a product that resulted in the worker’s injury. 

This means you are liable as both the employer and the manufacturer.‍

Consequential Body Injury

If a spouse or family member is injured as a result of your employee’s initial workplace injury, they can file a consequential bodily injury lawsuit. 

For example, this can be a family member that suffers an injury while taking care of their injured family member. 

Do You Need Workers’ Comp AND Employers’ Liability Insurance?

Long story short: Yes.

Lucky for you, Cake Insure always offers the two policies together.

Often referred to as “Part Two” of workers’ comp coverage, employers’ liability insurance is automatically included in every standard NCCI workers’ comp policy. 

Looking to Cover Your Colorado Business?

Cake Insure is the premier workers’ comp choice for Colorado small businesses. Our mobile-centric app allows business owners to get a free, non-committal quote in 90 seconds and workers’ comp coverage in just five minutes. 

Join the thousands of Colorado businesses that rely on Cake for fast, simple and effective workers’ comp coverage.