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The 4 Best Providers of Employers’ Liability Insurance

Small business owners know how important their employees are to the bottom line. Good employees are both hard to find and essential for good business. What if one of those employees hurts themselves on the job? That’s what workers’ compensation insurance is for, right? Well, yes. However, employers’ liability insurance can help if your employee decided to sue you.

The 4 Best Providers of Employers’ Liability Insurance

  • Hiscox – Best for simple and fast online quoting and purchase
  • The Hartford – Best for a longer reporting time for claims
  • Employers – Best for multi-lingual and 24/7 service
  • Pie Insurance – Best for potential savings

Hiscox – Best for Simple and Fast Online Quoting and Purchase

CoverHound, an online commercial insurance brokerage, teams up with Hiscox to provide workers’ compensation insurance. Hiscox specializes in small business insurance and prides themselves on providing simple, fast insurance. 

We tried to get a quote from them for our tax preparation business, but the form required we entered our social security number.

The Hartford – Best for a longer reporting time for claims

The Hartford offers workers’ compensation and Stop Gap coverage, in case you live in a state that doesn’t have employers’ liability insurance. They also allow a 60-day reporting time for claims, unlike the industry standard, which is 30 days. 

For our tax preparation business with three employees in CT, The Hartford quoted us $38.75 a month, or $465 annually.

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Employers – Best for multi-lingual and 24/7 service

Employers focuses on workers’ compensation insurance for the small business owner. They have multi-lingual, 24/7 claims service. They also have fraud investigation services.

For a quote, you need to fill out a form and someone from Employers will get back to you within 1-2 business days. 

Pie Insurance – Best for potential savings

Easy as pie! Pie insurance is a startup insurance company specializing in workers’ compensation insurance. They insure 32 states and Washington, D.C. They promise to save you 30% on your workers’ compensation insurance policy. 

For our tax preparation business with three employees in CA, they gave us this quote:

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What is Employers’ Liability Insurance?

Employers’ liability insurance is also known as part 2 of a workers’ compensation insurance policy. The first part protects your employees from on-the-job injuries and accidents. The second part covers the legal costs incurred when the employee brings you to court and is called employers’ liability insurance. 

How is It Different From “Employment Practices Liability Insurance”?

  • Employers’ liability insurance is part of workers’ compensation insurance and protects the employer if the worker decides he or she was injured due to negligence and wants to sue the employer. 
  • Employers’ practices liability insurance protects the employer if the worker sues for pretty much anything else – discrimination, wrongful termination, etc. It is a kind of professional liability insurance and it protects employers against employees’ claims such as:
    • Sexual harassment
    • Discrimination
    • Wrongful termination
    • Negligent evaluation
    • Failure to employ or promote
    • Wrongful discipline
    • Wrongful infliction of emotional distress

How is Employers’ Liability Insurance Different From Workers’ Compensation Insurance?

Employers’ liability insurance is sometimes referred to as part 2 of workers’ compensation insurance. Workers’ compensation (WC) insurance covers employees who are injured while working, no matter if the employer was at fault or not. Workers’ compensation pays for medical expenses and lost wages due to not working. 

Employers’ liability insurance, on the other hand, covers the employer when the employee feels the employer was negligent and sues the employer for the injury.

For example, Henry is a construction worker. He mentions to his employer that the wooden ladder he is supposed to use is rotting in spots. His employer takes note of this, but before he gets around to replacing it, one of the rungs on the ladder breaks, and Henry falls off the ladder and  breaks his ankle. Henry would be entitled to workers’ compensation, but he might also sue because his employer was negligent in letting Henry continue to use the faulty ladder. 

If your employee does choose to sue you, they give up their claims to workers’ compensation.

Employers’ liability insurance is typically included with workers’ compensation insurance, and workers’ compensation insurance is often required by state laws if you have any employees at all. 

Some states are known as monopolistic states and require you purchase workers’ compensation insurance from a state fund. This does not include employers’ liability insurance. If you want it, you need to add it on as an endorsement. It’s called Stop Gap coverage and affects the following states:

  • North Dakota
  • Ohio
  • Washington
  • Wyoming

If you live in any other state, employers’ liability insurance in included in Workers’ compensation insurance.

What does Employers’ Liability Insurance Cover?

There are five categories of claims that employers’ liability insurance covers:

  • Third-party action. If your employee receives workers’ compensation for an injury, they can’t sue you directly. However, if they were injured by a faulty piece of equipment, they can sue the manufacturer of said equipment. The manufacturer will then sue you. 
  • Loss of consortium. A spouse can sue you for “loss of a family relationship” such as when the employee was so severely injured it changed the nature of their relationship. They can also sue if the employee dies. 
  • Consequential body injury. If a spouse is injured as a result of the employee’s injury. For example, if all the stress from the employee’s injury causes the spouse to have a nervous breakdown.
  • Dual-capacity suit. This means employee and employer have more than one relationship. An employee who was injured by a product your company makes is both your employee and a user of your product. 
  • Gross Negligence. If you asked your employee to do something that you knew was dangerous and then the employee was injured or killed. 

What doesn’t It Cover?

It doesn’t cover everything. There are exceptions, like:

  • Employees who were injured when engaged in illegal activity
  • Bodily injury either caused or exacerbated by the employer
  • Punitive damages sought by employees who were engaged in illegal activities
  • Bodily injury to an employee when they outside of the U.S., its territories, or Canada. This does not apply if the employee is a U.S. citizen and is temporarily outside the country
  • Self-inflicted injuries

How Much does Employers’ Liability Insurance Cost?

You’ll have to look into workers’ compensation insurance because employers’ liability insurance is part of that. The average cost of workers’ compensation insurance varies dramatically depending on state and industry. There’s a formula to calculate workers’ compensation insurance:

Classification code x experience modification rate x payroll (per $100) = premium

Each industry is assigned a classification code depending on the level of risk involved. Experience modification rate is based on how many workers’ compensation claims an employer has had, and this is multiplied x $100 worth of payroll. There’s also an administrative fee of $250 attached per policy. 

For more information on how to calculate workers’ compensation insurance, see another article, How Much does Workers’ Compensation Insurance Cost?

>>MORE: Best 7 Workers’ Compensation Insurance Companies for Small Business

Last Thoughts

Employers’ liability insurance is part 2 of workers’ compensation insurance, which is necessary and required in many states. Even if it’s not required in your state, it’s essential for any business that has employees. Accidents happen, and they often happen on the job. Protect yourself and your business.

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