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

Part One: Pays Whatever the Statute Requires

Part One (Coverage A) 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, the insurer pays, even a multi-million-dollar catastrophic claim. Part One also obligates the insurer to handle the claim directly with the injured worker and the state board, including filing required reports and paying benefits promptly to avoid statutory penalties.

Exam Key: Part One has no limit because the obligation is fixed by statute, not by the contract. The insurer pays the state-mandated amount and then has a right of recovery against the employer only for benefits the insurer was NOT obligated to pay (e.g., penalties from the employer's serious-and-willful misconduct or failure to comply with health/safety laws).

Part Two: Employers Liability

The exclusive-remedy bargain blocks most employee suits, but not all injury-related liability. Part Two (Coverage B), Employers Liability, pays sums the employer becomes legally obligated to pay as damages for a covered work-related bodily injury when the comp statute does not bar the action. Unlike Part One, Part Two is true liability insurance with dollar limits and a duty to defend.

The Three Standard Limits Decoded

The NCCI standard employers-liability limits are written $100,000 / $500,000 / $100,000, and each number means something different — a guaranteed exam point:

Note that the middle number is the only aggregate, and it applies to disease, not accident. There is intentionally no per-accident aggregate for bodily injury by accident — each separate accident has its own each-accident limit. Many commercial buyers raise these to $500K/$500K/$500K or $1M/$1M/$1M to satisfy umbrella attachment requirements, because an umbrella will not sit over employers liability limits lower than its required underlying minimum.

What Coverage B Actually Pays For

Four suit types fall to Part Two:

1. Third-party-over actions (most tested) — the worker collects comp, sues an outside party (e.g., a machine maker), and that party brings the employer into the suit for contribution/indemnity. Part Two pays the employer's exposure.
2. Loss-of-consortium / dual-capacity claims by a spouse or family member arising from the worker's injury.
3. Consequential bodily injury to a family member (e.g., spouse's injury caring for the worker).
4. Care-and-loss-of-services claims by relatives.

Trap — what Part Two does NOT pay: punitive damages, fines/penalties, liability assumed under contract, intentional injury caused by the employer, and obligations already payable under any workers' comp law. If the statute covers it, it belongs in Part One, never Part Two.

Part One — Workers Compensation

The standard Workers Compensation and Employers Liability Policy has two insuring agreements. Part One (Workers Compensation) is the insurer's promise to pay promptly all benefits required by the workers comp law of the states listed in the declarations. There is no dollar limit on Part One — the insurer pays whatever the statute requires, because the obligation is set by law, not by the policy. The insurer also handles claims and may not settle in a way that prejudices the worker's statutory rights.

Part Two — Employers Liability

Part Two (Employers Liability) fills gaps the statutory system leaves open. It pays for the employer's liability for work-related injury that falls outside the workers comp statute — for example, third-party-over actions (a hurt employee sues a machine maker, who then sues the employer), consequential injury to a family member, dual-capacity suits, and care-and-loss-of-services claims.

Unlike Part One, Part Two has limits — typically shown as three numbers such as $100,000 / $500,000 / $100,000 (bodily injury by accident each accident / by disease policy limit / by disease each employee). A worked point: the disease policy limit caps all disease claims in aggregate, while the disease each employee limit caps any one worker's disease claim. Exclusions include punitive damages, intentional injury caused by the employer, and obligations under other laws (it pairs with Part Three for those).

Reading the Part Two Limits

Part Two limits are shown as three figures, for example $500,000 / $1,000,000 / $500,000. The first is bodily injury by accident — each accident; the second is bodily injury by disease — policy limit (the aggregate for all disease claims in the period); the third is bodily injury by disease — each employee. A scenario giving five employees who each develop an occupational disease tests the disease policy limit as the aggregate cap, while a single worker's disease claim is bounded by the each employee figure.

Knowing which of the three numbers governs a given fact pattern is a reliable exam point that distinguishes Part Two (limited) from Part One (statutory, unlimited).