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

The Standard Policy: WC 00 00 00

The policy that nearly every state uses is the Workers Compensation and Employers Liability Insurance Policy, NCCI form WC 00 00 00 C. It is one contract containing several numbered "Parts." The two heavily tested coverages are Part One - Workers Compensation Insurance and Part Two - Employers Liability Insurance. The Information Page (the declarations equivalent) lists Item 3.A for Part One states and Item 3.C for other states.

Think of the structure this way: Part One pays what the statute requires; Part Two pays liability the statute does not cover.

Part One - Workers Compensation Insurance

Under Part One the insurer promptly pays the benefits required by the workers compensation law of any state listed in Item 3.A of the Information Page. Tested features:

• No dollar limit on Part One. The insurer pays whatever the statute requires, even if it changes after the policy is issued.
• The insurer's obligation runs to the state, not just the insured; even if the employer is bankrupt or in breach, the injured worker is still paid.
• If the insurer pays an amount the law does not require (e.g., the employer failed to comply with the law), the insured must reimburse the insurer.
• Coverage applies to bodily injury by accident (date = the accident date) and bodily injury by disease (date = the last day of last exposure).

Part Two - Employers Liability Insurance

Part Two is true liability coverage. It pays damages the employer becomes legally liable to pay because of work-related bodily injury not covered by the WC statute. It fills exactly the gaps from 13.1:

• Third-party-over actions (a sued third party seeks contribution from the employer).
• Consortium / care and services claims by the worker's spouse or family.
• Dual-capacity suits.
• Consequential bodily injury to a family member of an injured worker.

Unlike Part One, Part Two has dollar limits shown in Item 3.B. The standard minimum limits are $100,000 each accident (bodily injury by accident), $500,000 policy limit (bodily injury by disease), and $100,000 each employee (bodily injury by disease) - the familiar 100/500/100.

Reading the 100/500/100 Limits

Trap: the $500,000 is a policy-period aggregate for disease, while the two $100,000 figures are per accident and per employee. The accident limit has no aggregate; the disease coverage does. These limits can be raised, and an umbrella can sit over Part Two (but never over Part One, which has no limit).

Worked Example: Part Two Limits

A covered third-party-over suit results in a $250,000 judgment against the insured employer arising from a single accident injuring one employee, on a policy with standard 100/500/100 limits.

• The bodily-injury-by-accident limit is $100,000 each accident.
• The insurer pays $100,000; the insured is exposed for the remaining $150,000 unless higher limits or an umbrella applied.

Contrast: had this been a disease claim, the $100,000 each employee limit would apply (still $100,000 for one employee), subject to the $500,000 policy aggregate across all disease claims.

The Third-Party-Over Claim and Other-States Coordination

Part Two (Employers Liability) exists to cover the liability gaps Part One's statutory benefits leave open, and the exam tests four classic Part Two triggers: a third-party-over action (an injured worker sues a product maker, who then sues the employer for contribution), consequential bodily injury to a family member, dual-capacity suits (the employer is also the manufacturer of the injuring product), and injury in a state where the employer was not required to provide WC.

The standard limits — commonly written $100,000 / $500,000 / $100,000 — apply as: $100,000 per accident (bodily injury by accident), $500,000 policy limit (bodily injury by disease), and $100,000 per employee (bodily injury by disease). Part Two does not pay if Part One's statutory benefits already cover the claim, if the injury is intentional, or if it occurs outside the coverage territory. Pairing Part One's unlimited statutory benefits with Part Two's capped liability limits is the structural insight the exam rewards.

Reading the 100/500/100 Limits and the Coverage-Gap Recap

The Part Two limits are written as three numbers that confuse students, so commit them precisely: bodily injury by accident — per accident (e.g., $100,000, capping all employees hurt in one accident), bodily injury by disease — policy limit (e.g., $500,000, an aggregate for all disease claims during the term), and bodily injury by disease — each employee (e.g., $100,000 per worker). Part Two responds only when Part One's statutory benefits do not apply — the third-party-over suit, the dual-capacity claim, the consequential-injury claim, and the loss in a state not covered by Part One.

If a worker is simply hurt on the job in a covered state, Part One's unlimited statutory benefits pay and Part Two never engages — the structural distinction the exam rewards.