13.2 Part One (Workers Comp) and Part Two (Employers Liability)
Key Takeaways
- Part One pays statutory workers comp benefits with no dollar limit; Part Two pays tort-style employer liability subject to limits.
- Part Two covers gaps such as third-party-over actions, loss of consortium, consequential injury, and dual-capacity suits.
- Part Two limits have three parts: bodily injury by accident (each accident), disease policy limit (aggregate), and disease each employee.
- Listed states appear in Item 3.A of the Information Page; Part One follows each listed state's statute.
The Two Coverages in One Policy
The standard NCCI Workers Compensation and Employers Liability Insurance Policy packages two distinct coverages. Knowing the difference is heavily tested because each responds to a different kind of claim.
- Part One - Workers Compensation Insurance pays the statutory benefits the state law requires. It has no dollar limit because the insurer agrees to pay whatever the workers comp law mandates.
- Part Two - Employers Liability Insurance pays for the employer's legal liability for work-related injuries that fall outside the workers comp statute. Part Two carries dollar limits because these are tort-style damages, not statutory benefits.
Part One: Statutory, Unlimited, No Deductible
Under Part One the insurer promises to pay promptly when due all benefits required by the workers comp law of each state shown in Item 3.A of the Information Page. Key Part One features:
- No policy limit — the obligation is whatever the statute requires.
- The insurer pays first and may seek reimbursement from the insured only for amounts the insured was not required to pay (e.g., penalties for the employer's serious-and-willful misconduct).
- It applies on a per-occurrence/per-state basis as defined by each listed state's act.
Part Two: The 'Gaps' Employers Liability Fills
Part Two responds when an employee (or someone on the employee's behalf) sues the employer for a work injury that the workers comp statute does not cover. Classic tested examples:
- Third-party-over actions — an injured worker sues a product manufacturer, who then sues the employer for contribution.
- Consequential bodily injury — injury to a spouse, child, parent, or sibling as a consequence of the worker's injury.
- Loss of consortium claims by a worker's family member.
- Dual-capacity suits, where the employer is sued in a second role (e.g., as the manufacturer of the machine that injured the worker).
The Part Two Three-Part Limit
Part Two limits are written as three separate figures, commonly shown as something like $100,000 / $500,000 / $100,000:
| Limit | Applies to | Basis |
|---|---|---|
| Bodily Injury by Accident | Each accident | Per-accident limit, no annual aggregate |
| Bodily Injury by Disease - Policy Limit | All disease claims combined | Aggregate for the policy period |
| Bodily Injury by Disease - Each Employee | Any one employee's disease claim | Per-employee sub-limit |
Worked example: Limits are $100,000 / $500,000 / $100,000. Three employees develop a covered occupational disease and each is awarded $150,000 in an employers-liability suit. Each employee is capped at the $100,000 each-employee limit, so the insurer would pay $100,000 x 3 = $300,000 - which is within the $500,000 disease aggregate, so all three are paid in full to their per-employee cap.
An injured worker collects statutory benefits, then sues a machine maker, who in turn sues the employer for contribution. Which coverage of the standard policy responds to the employer's defense and any contribution award?
Two Coverages in One Policy
The Workers Compensation and Employers Liability policy contains two distinct coverages. Part One (Workers Compensation) pays the statutory benefits the law requires, with no dollar limit and no deductible, because the insurer promises to pay whatever the state act mandates. Part Two (Employers Liability) covers the employer's liability for work-related injuries that fall outside the workers compensation statute, providing the tort-style protection that Part One's exclusive-remedy benefits do not. Understanding that Part One is statutory and unlimited while Part Two is a limited liability coverage is the core distinction.
Part One: Statutory, Unlimited, No Deductible
Part One simply states that the insurer will pay promptly when due the benefits required by the workers compensation law of any state listed in the policy. There is no policy limit because the obligation is whatever the statute requires; the insurer also handles claims and may seek reimbursement from the insured only for benefits paid because of the employer's serious and willful misconduct or failure to comply with health and safety laws. This statutory, open-ended promise is why workers compensation premiums are based on payroll and classification rather than on a stated limit.
Part Two: The Gaps Employers Liability Fills
Part Two responds to suits that are not covered by the statutory benefits of Part One, such as third-party-over actions (a manufacturer sued by an injured worker brings the employer in for contribution), consequential bodily injury to a family member, dual-capacity suits, and care-and-loss-of-services claims by an injured worker's spouse. It does not cover the injured worker's own statutory claim (Part One handles that). Part Two is what makes the policy a true liability contract for the residual exposures left after the exclusive-remedy bargain.
The Part Two Three-Part Limit
Part Two carries a three-part limit, commonly expressed as 100,000/500,000/100,000. The bodily injury by accident limit (the first figure) applies per accident regardless of the number of employees injured. The bodily injury by disease policy limit (the middle figure) is an aggregate cap for all disease claims during the policy period. The bodily injury by disease each-employee limit (the third figure) caps the recovery for any one employee's disease claim.
A scenario describing several employees contracting an occupational disease is testing the disease aggregate and per-employee limits, while a single explosion injuring many workers tests the by-accident limit.