Most New Jersey companies are required to carry workers’ compensation insurance in the event of employees sustaining on-the-job injuries. However, they may also carry employer liability insurance. You might wonder if these two policies are the same thing.
What is employer liability insurance?
Employer liability insurance is a type of insurance that can protect a business when an employee suffers injuries or illness on the job and decides to file a lawsuit. Although workers’ comp is meant to protect the employee if they develop an on-the-job injury or illness and the employer from being the target of a personal injury claim, employer liability insurance goes several steps further.
When workers’ comp doesn’t cover every situation after an employee is left dealing with an injury or illness, employer liability comes in handy. It can be used alongside workers’ compensation to cover the costs of those injuries, illnesses and even death.
What type of claims does employer liability insurance cover?
Employer liability insurance can cover lawsuits filed by employees when their injury or illness is due to negligence. Of course, workers’ comp is in place to protect employers from being hit with lawsuits. However, an employee can still sue for different reasons.
Employer liability insurance can cover third-party lawsuits, dual capacity lawsuits and loss of consortium lawsuits. It can also cover the costs of a lawsuit filed by a person who is not an employee of a company due to injuries or illnesses suffered by someone who works for the company. For example, if an employee develops a serious illness and needs constant care provided by their spouse, the spouse could file a lawsuit due to having to quit their job to care for them.
What does employer liability insurance not cover?
Not everything is covered by employer liability insurance. Employers cannot be protected against lawsuits involving allegations of fraud or other criminal activity, sexual harassment, discrimination or wrongful termination.