13.2 Part One (Workers Comp) and Part Two (Employers Liability)

The Standard Policy: NCCI WC 00 00 00

Nearly every competitive state uses the NCCI Workers Compensation and Employers Liability Insurance Policy (form WC 00 00 00 C). The policy has six numbered parts, but exams concentrate on Part One and Part Two. The Information Page (the declarations equivalent) lists Item 3.A. (the states where Part One applies) and Item 3.C. (the Other States states), plus the Part Two limits and the classifications and rates.

Part One — Workers Compensation

Part One promises to pay promptly when due all benefits required by the workers compensation law of any state listed in Item 3.A. of the Information Page. Key features tested heavily:

• No dollar limit. The insurer pays whatever the statute mandates — there is no policy limit on Part One because the benefit amounts are fixed by law, not by the policy.
• It responds to statutory benefits only (medical, disability, rehab, death).
• It covers occupational disease as well as accidental injury, subject to the exposure-date rules in the law.
• The insurer's duty is directly to the injured worker under the statute, not merely to reimburse the employer.

Part Two — Employers Liability

Part Two fills the gaps left by Part One. It is liability coverage that pays sums the employer becomes legally liable to pay as damages because of bodily injury by accident or disease that is NOT compensable under the workers compensation statute. Unlike Part One, Part Two has limits, shown three ways on the Information Page:

• Bodily Injury by Accident — a limit each accident (e.g., $1,000,000 each accident).
• Bodily Injury by Disease — a policy limit (aggregate for disease, e.g., $1,000,000 policy limit).
• Bodily Injury by Disease — a limit each employee (e.g., $1,000,000 each employee).

What Part Two Actually Covers

Part Two pays for the unusual liability suits that slip past the exclusive-remedy bar. Classic exam examples:

• Third-party-over actions — an injured worker sues a machine maker, who then sues the employer for contribution/indemnity alleging the employer's negligence.
• Consequential bodily injury — injury to a spouse, child, parent, or other relative of the injured worker (e.g., loss of consortium).
• Dual-capacity suits — the employer is sued in a second capacity (e.g., as the manufacturer of the product that hurt its own employee).
• Care and loss of services claims by the worker's family.

Part Two does not cover the statutory benefits themselves (Part One does that) or intentional employer acts.

Part One vs. Part Two at a Glance

A Limits Trap

Watch the disease policy limit versus the disease each-employee limit. With limits of $1,000,000 / $1,000,000 / $1,000,000: if a chemical exposure injures five employees, each employee's recovery is capped at $1,000,000 (each-employee limit) and the total disease payout for the policy period is also capped at $1,000,000 (policy limit). So five $1,000,000 claims do not all pay in full — the $1,000,000 disease policy aggregate governs the total. The each-accident limit is separate and applies to accident (not disease) injuries.

Part One vs. Part Two at a Glance

What Part Two Covers — The Gap Filler

Part Two responds to employee-injury liability not covered by the statutory benefits of Part One. The exam tests its classic triggers:

• Third-party-over (action over) suits — an injured worker sues a third party, who then sues the employer for contribution.
• Consequential bodily injury — injury to a family member flowing from the employee's injury.
• Dual-capacity claims — the employer is sued in a second role (e.g., as the manufacturer of the machine that injured its own employee).
• Loss of consortium claims by a spouse.

Part Two Limits

Unlike Part One, Part Two has dollar limits, commonly shown as three figures: bodily injury by accident (each accident), bodily injury by disease (policy limit), and bodily injury by disease (each employee). The standard minimum is often $100,000 / $500,000 / $100,000. Recognizing that Part One is statutory and unlimited while Part Two is tort-based and dollar-limited — and that Part Two exists to catch employee-injury liability outside the exclusive remedy — resolves most workers-comp coverage questions.

The Insuring Logic Behind Two Parts

The two-part structure exists because a single injury can create two different legal obligations. Part One discharges the employer's statutory duty — pay defined benefits regardless of fault. Part Two discharges the employer's tort duty when a worker (or someone suing through the worker) pursues damages the statute does not bar, such as a third-party-over action. Without Part Two, an employer that paid statutory benefits could still face an uninsured negligence judgment routed around the exclusive remedy. The exam frames the two parts as the statutory floor (Part One) plus the tort backstop (Part Two).