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

The Standard Policy: WC 00 00 00 C

The single most important form name in this unit is the NCCI Workers Compensation and Employers Liability Insurance Policy, form WC 00 00 00 C. NCCI (National Council on Compensation Insurance) is the rating/advisory bureau for most states; independent bureau states (e.g., California, New York, Pennsylvania) use parallel forms. The policy has six parts, but the exam concentrates on Part One and Part Two.

• Part One — Workers Compensation pays benefits the state statute requires. There is no policy limit; the insurer pays whatever the law mandates.
• Part Two — Employers Liability covers the employer's tort liability for work-related injury that falls outside the WC statute. This part has dollar limits.

Part One: Statutory Coverage

Part One is keyed to the Information Page (the WC declarations), which lists the states whose laws apply under Item 3.A. The insurer agrees to pay promptly all benefits required by the WC law of any listed state. Key Part One features:

• No dollar limit — driven entirely by statute.
• Insurer has the right and duty to defend WC claims and proceedings.
• If the insurer is required to pay more than the statute (e.g., because of the employer's serious/willful misconduct), it can recover that excess from the insured.
• Covers occupational disease as well as injury by accident, subject to the statute's exposure rules.

Part Two: Employers Liability

Part Two fills tort gaps the WC statute does not reach. Classic exam scenarios it responds to:

• Third-party-over actions — an injured worker sues a third party (e.g., a machine maker), who then sues the employer for contribution.
• Loss of consortium / care and loss of services claims by a worker's spouse or relative.
• Consequential bodily injury to a family member.
• Dual-capacity claims.

Part Two does not cover injuries that are compensable under the WC statute (those go to Part One), intentional injury caused by the employer, fines/penalties, or liability assumed under contract.

Part Two Limits — Three Distinct Limits

Employers Liability uses three separate limits, often shown as a split:

A typical employers-liability limit reads $1,000,000 / $1,000,000 / $1,000,000. The standard minimum often shown is $100,000 / $500,000 / $100,000.

Worked example: A single explosion injures four employees with employers-liability tort claims totaling $1,400,000. The 'each accident' limit is $1,000,000. Because all four arose from one accident, the insurer pays a maximum of $1,000,000 — the per-accident limit, not a per-person amount.

Why Part Two Exists Alongside Statutory Coverage

Part One pays whatever the state statute requires with no dollar limit, because the insurer promises to pay all benefits the law imposes. Part Two - Employers Liability exists to cover the tort lawsuits that fall outside the exclusive remedy — situations where an employee or a third party can still sue the employer despite workers comp. These include third-party-over actions (an injured worker sues a product maker, who then sues the employer), consequential injuries to family members, dual-capacity suits, and care-and-loss-of-consortium claims.

Because these are unlimited-exposure lawsuits, Part Two carries dollar limits (a common default such as $100,000 bodily injury by accident each accident, $500,000 by disease policy limit, and $100,000 by disease each employee).

The Information Page and 3.A vs. 3.C

The Information Page is the workers comp declarations. Item 3.A lists the states where coverage is primary — the employer's main operations — and Part One pays the statutory benefits of those states without limit. Item 3.C lists Other States Insurance states where coverage springs into effect if the employer expands, provided the employer was not operating there on the effective date.

Listing a state in 3.A versus 3.C is a heavily tested distinction: an employer with workers in a state that appears in neither item has a dangerous gap, especially if that state is monopolistic, where the standard policy cannot provide Part One at all.

A Part Two Limits Walkthrough

Part Two limits are written as three figures, commonly $100,000 / $500,000 / $100,000: bodily injury by accident, each accident ($100,000); bodily injury by disease, policy limit ($500,000, the aggregate for all disease claims during the term); and bodily injury by disease, each employee ($100,000). If three workers are injured in one explosion (an accident), the $100,000 each-accident limit caps the total for that event. If several workers develop an occupational disease over time, each is capped at $100,000 with the $500,000 policy aggregate over all of them.

Distinguishing the accident limit from the two disease limits, and the per-employee from the aggregate, is the core Part Two calculation the exam tests.

Information Page Items 3.A vs 3.C

A recurring trap distinguishes two items on the Information Page:

• Item 3.A lists states where coverage applies on the effective date — full statutory coverage under Part One.
• Item 3.C lists Other States Insurance states — coverage that springs to life only if the employer begins work there during the policy period (covered in 13.4).

A state that is monopolistic (where the employer must buy WC from a state fund) can appear in neither 3.A nor 3.C because private carriers cannot write Part One there.