Key Takeaways
- Part Two (Coverage B) provides employers liability coverage with LIMITED policy limits—standard limits are $100,000/$500,000/$100,000
- Employers liability covers lawsuits NOT covered by workers' compensation statutory benefits—when the exclusive remedy doesn't apply
- Third-party over actions occur when an injured worker sues a third party who then seeks contribution from the employer
- The dual capacity doctrine allows an employee to sue the employer when acting in a capacity OTHER than as employer (e.g., as product manufacturer)
- Monopolistic states (OH, ND, WA, WY) do NOT include employers liability—employers need STOP GAP coverage from their CGL policy
Part Two: Employers Liability (Coverage B)
Overview
Part Two (Coverage B) provides liability coverage for situations where the exclusive remedy doctrine doesn't fully protect the employer from lawsuit.
| Feature | Part One (Coverage A) | Part Two (Coverage B) |
|---|---|---|
| Coverage Type | Workers' Compensation | Employers Liability |
| Policy Limits | UNLIMITED | LIMITED |
| Standard Limits | N/A | $100K/$500K/$100K |
| What It Covers | Statutory benefits | Lawsuits beyond WC |
Standard Employers Liability Limits
The standard limits are expressed as $100,000 / $500,000 / $100,000:
| Limit | Applies To |
|---|---|
| $100,000 | Per accident (bodily injury) |
| $500,000 | Policy aggregate for disease |
| $100,000 | Per employee for disease |
These limits can be increased or decreased based on employer needs.
When Employers Liability Applies
Coverage B protects employers against lawsuits that fall outside the workers' compensation system:
1. Third-Party Over Actions
Scenario: An employee is injured, collects workers' comp, then sues a third party (equipment manufacturer, property owner, etc.). That third party seeks contribution or indemnity from the employer.
Example:
- Employee injured by defective forklift at work
- Employee collects workers' comp benefits
- Employee sues forklift manufacturer for additional damages
- Manufacturer sues employer claiming improper training contributed to injury
- Coverage B defends employer and pays damages if liable
2. Dual Capacity Doctrine
Definition: An employer normally protected by exclusive remedy may be sued when acting in a capacity other than as employer.
Examples:
| Dual Capacity | How It Works |
|---|---|
| Product Manufacturer | Employee of forklift company injured by company's own forklift—can sue as both WC claim AND product liability |
| Medical Provider | Employer provides on-site clinic; negligent medical treatment creates second capacity |
| Landlord | Employer owns building where employee works; premises liability creates second capacity |
3. Consequential Bodily Injury
Scenario: A family member sues for their own injuries or losses resulting from the employee's work injury.
Example: Spouse sues employer claiming emotional distress from caring for severely injured worker.
4. Loss of Consortium
Scenario: Spouse sues for loss of companionship, affection, or services due to employee's work injury.
Monopolistic States and Stop Gap Coverage
The Four Monopolistic States:
Ohio, North Dakota, Washington, Wyoming (plus Puerto Rico and U.S. Virgin Islands)
Key Issue: State funds in monopolistic states provide workers' compensation (Coverage A) but DO NOT include employers liability (Coverage B).
Stop Gap Coverage
Solution: Employers operating in monopolistic states must purchase stop gap coverage as an endorsement to their general liability (CGL) policy or another workers' comp policy.
| State Fund Provides | Stop Gap Provides |
|---|---|
| Coverage A (Workers' Comp) | Coverage B (Employers Liability) |
| Statutory benefits | Defense and damages for EL claims |
Standard Stop Gap Endorsements:
- WC 00 03 03 (General)
- WC 34 03 01 (Ohio-specific)
What are the standard employers liability (Coverage B) limits?
A third-party over action occurs when:
Which states are "monopolistic" for workers' compensation and require stop gap coverage for employers liability?
10.4 Workers Compensation Exclusions
Continue learning