Glossary

Employers' liability

The part of a workers' compensation policy covering suits over workplace injuries that fall outside the comp system, such as third-party-over claims.

Also called: employers liability insurance, Part Two, EL coverage, workers' comp Part Two

Workers' compensation pays injured employees without regard to fault, and in return the employer is generally shielded from injury lawsuits. Employers' liability, Part Two of the NCCI workers' compensation and employers liability policy (WC 00 00 00), covers the gaps in that shield: bodily injury by accident or disease that comp does not cover but that still produces a suit against the employer. The usual examples are a third-party-over claim, where an injured worker sues a contractor or equipment maker who then sues the employer for contribution, a spouse's loss of consortium claim, and, in some states, dual capacity claims.

The standard limits are $100,000 each accident, $500,000 disease policy limit and $100,000 disease each employee. Umbrella carriers and customer contracts often require $500,000 / $500,000 / $500,000 or $1 million in each, so buyers raise it. The coverage excludes benefits owed under comp law and intentionally caused injury.

In the monopolistic states of North Dakota, Ohio, Washington and Wyoming, the state fund policy does not include employers' liability, and employers buy stop gap coverage separately.

employers' liability insurance explains the coverage in depth, stop gap coverage in monopolistic states covers the monopolistic-state fix, and workers' compensation defines the Part One benefits.

Last reviewed October 10, 2026

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Related terms

Workers' compensation State-mandated no-fault insurance that pays medical care and part of lost wages for work-related injuries, in exchange for limits on employee lawsuits. Stop gap coverage Employers' liability insurance bought separately where a state fund provides workers' comp but does not insure lawsuits by injured employees or their families. Monopolistic state fund A government-run workers' comp fund that is the exclusive source of coverage in its state; employers buy from it or self-insure, not from private carriers. Umbrella policy A liability policy that adds limits above underlying general liability, auto and employers' liability policies and may cover some claims they do not. Bodily injury Physical injury, sickness or disease suffered by a person, including death resulting from it; the harm that triggers liability coverage for injuries.

Related guides

Employers' liability insurance (Part Two) What Part Two of the workers' comp policy covers, its standard 100/500/100 limits, key exclusions, the umbrella link and stop gap in monopolistic states. Independent contractors and workers' comp: the misclassification risk How workers' comp treats independent contractors, why a 1099 label does not settle it, and where the DOL, IRS and ABC tests stand as of October 2026. Monopolistic state funds: workers' comp in ND, OH, WA and WY How workers' comp works in the four states where private insurers cannot sell it: the mandate, self-insurance rules, premiums and the separate stop gap need. Employees in several states: other-states coverage and multistate workers' comp How Items 3.A and 3.C of the NCCI policy, extraterritorial rules and state payroll allocation decide which comp law covers staff who work in several states. Can owners and officers exclude themselves from workers' comp? Most states let some owners and officers opt out of workers' comp, but eligibility and paperwork differ. What you give up and where construction is stricter. Remote employees and workers' comp: coverage, claims and state rules How workers' comp applies to employees working from home, which state's law and policy govern a remote hire, and how home-office injuries are judged.

Related insurers

EMPLOYERS Reno-based workers' comp specialist for lower-hazard small businesses, sold through agents and online through its Cerity brand; rated A (Excellent) by AM Best. New York State Insurance Fund (NYSIF) New York's state agency fund for workers' comp, disability and paid family leave. It competes with private carriers and must take any employer that applies. Pie Insurance Venture-backed insurtech that writes small business workers' comp on its own A- rated paper in 39 states and D.C., sold online and through 5,000-plus agencies. State Compensation Insurance Fund (State Fund) California's not-for-profit state fund, created in 1914. It competes with private carriers for workers' comp and keeps its door open to any California employer. Texas Mutual Policyholder-owned workers' comp insurer created by Texas lawmakers in 1991. It leads the Texas comp market and is the state's insurer of last resort.

Related tools

How much umbrella coverage do I need? Score the exposures that drive large liability claims, apply any contract-required limit and check your primary limits to get a starting umbrella range.

Related en español

Contratistas independientes y compensación laboral: el riesgo de clasificarlos mal Cómo trata la compensación laboral a los contratistas independientes, por qué un 1099 no basta y dónde están las pruebas del DOL, IRS y ABC a octubre de 2026. Seguro de compensación laboral: cómo funciona Qué paga, quién debe tenerla, cómo se calcula la prima con nómina, códigos de clase y factor de experiencia, y qué hacen las tres partes de la póliza.