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

Two Coverage Parts on One Policy

The standard policy is the NCCI Workers Compensation and Employers Liability Insurance Policy (form WC 00 00 00). It bundles two distinct coverages:

• Part One — Workers Compensation Insurance (Coverage A)
• Part Two — Employers Liability Insurance (Coverage B)

Part One Has No Limit

Part One is the insurer's promise to pay, on the employer's behalf, the benefits required by the workers compensation law of any state listed in Item 3.A of the Information Page. Its defining feature is that there is no dollar limit. Whatever the statute commands — even a multi-million-dollar catastrophic claim — the insurer pays.

Exam Key: Part One has no limit because the obligation is fixed by statute, not by the contract. Contrast Part Two, which always carries stated dollar limits. If a question asks which part is 'unlimited,' the answer is Part One.

Why Part Two (Employers Liability) Exists

If Part One pays statutory benefits no matter what, why is Part Two needed? Because some injury-related lawsuits fall outside the comp statute and are therefore not barred by the exclusive-remedy rule. Part Two responds to those suits and pays defense costs and damages. The classic gap-fillers:

• Third-party-over actions — a worker sues a product manufacturer, and the manufacturer then sues the employer for indemnity.
• Loss of consortium — the injured worker's spouse sues for loss of companionship.
• Consequential injury — a family member's injury claimed to flow from the employee's work injury.
• Dual-capacity — the employer is sued in a second capacity, such as the manufacturer of the very product that hurt the worker.

These are tort suits the comp bargain does not extinguish, so the employer needs liability coverage — that is Part Two.

Part Two Limits: 100/500/100

Unlike Part One, Part Two carries dollar limits, shown three ways on the Information Page. A common standard set is 100/500/100:

The by-accident limit applies per accident regardless of how many employees are hurt. The by-disease policy limit is the most the insurer pays for all disease claims combined. The by-disease each-employee limit caps any single employee's disease claim.

Worked example: A toxic exposure injures four employees over the policy year, each with a $150,000 judgment. The each-employee limit caps each at $100,000, and the policy aggregate caps the total at $500,000 — so the insurer pays 4 × $100,000 = $400,000, within the $500,000 aggregate. If a fifth and sixth employee filed, the aggregate would cut payment off at $500,000 total.

Reading the Information Page

The Information Page (the WC equivalent of a declarations page) is where the two parts are activated by item number, and the exam expects you to know the layout:

Notice that Part One carries no limit entry — there is nothing to fill in because the statute sets the amount. Only Part Two has a dollar-limit line (Item 3.B). When a question asks 'where are the employers-liability limits shown,' the answer is Item 3.B, and the states triggering Part One are in Item 3.A.

Exam Key: A single WC policy can cover multiple states under Part One simply by listing each in Item 3.A. There is no separate per-state premium 'limit' because each state's act dictates its own benefits — the insurer simply pays each state's schedule.

Part One vs. Part Two of the WC Policy

The Workers Compensation and Employers Liability Policy contains two distinct insuring agreements that the exam constantly contrasts:

Part Two (Employers Liability) fills gaps where an employee or related party sues the employer outside the WC system - for example, a third-party-over action (a manufacturer sued by the worker then suing the employer for contribution) or a consortium claim by a spouse.

Exam trap: Part One has NO dollar limit because it simply pays whatever the state statute requires; only Part Two (Employers Liability) carries dollar limits (the familiar bodily injury by accident each accident / by disease policy limit / by disease each employee, e.g., $100,000/$500,000/$100,000). Part Three - Other States Insurance extends coverage to operations in additional listed states.