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

Two Promises in One Policy

The standard NCCI Workers Compensation and Employers Liability Policy (form WC 00 00 00 C) contains two distinct insuring agreements that exam writers love to contrast. Part One is statutory; Part Two is liability. Understanding why both exist is the key to a string of test questions.

Part One covers the no-fault benefits the statute requires. Part Two covers lawsuits the comp statute does not bar — the gaps in the exclusive-remedy shield. Together they wrap the employer in both directions.

Part One — Workers Compensation (Coverage A)

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 shown in Item 3.A of the Information Page. Its defining trait: there is NO dollar limit. Whatever the state act commands — a $5 million catastrophic burn claim included — the insurer pays in full.

The insurer also handles the claim. There is no deductible borne by the worker. The states listed in Item 3.A are the monopolistic/primary states where Part One directly applies; a worker injured in any of those states triggers statutory benefits automatically.

Part Two — Employers Liability (Coverage B)

Part Two is genuine liability coverage. It responds when an employee (or someone on the employee's behalf) sues the employer outside the workers comp system. Because these suits seek damages, Part Two does carry limits — unlike Part One. Standard NCCI default limits are:

These are written as $100,000 / $500,000 / $100,000 and are routinely increased by an Employers Liability — Increased Limits endorsement when an umbrella requires higher underlying limits.

Why the Two Disease Limits Differ

Notice Part Two has two disease numbers. The $100,000 disease each employee caps what any single employee can recover for an occupational-disease suit. The $500,000 disease policy limit is the aggregate — the most the insurer pays for all disease suits during the policy period combined. The accident limit, by contrast, applies per accident with no separate aggregate, because a single accident is a discrete event.

A worked example: if five employees each win disease judgments of $100,000, the per-employee limit ($100,000) is met for each, but the $500,000 aggregate is exhausted — a sixth disease claimant that period would have no Part Two coverage. This aggregate-versus-per-claim distinction is a frequent trap.

Coordinating Part One and Part Two

The two parts work as a team. A routine injury claim flows entirely through Part One as no-fault benefits — no lawsuit, no limit, no defense cost to the employer. The moment a claim becomes a suit the comp statute does not bar, the file shifts to Part Two, which pays defense costs in addition to the limit (defense is outside the limit, as in most liability forms).

Watch the exam phrasing. Words like benefits, statute, scheduled award, medical bills point to Part One. Words like sue, damages, lawsuit, consortium, third-party point to Part Two. The same injury can trigger both at once — the worker collects statutory benefits while the spouse separately sues for loss of consortium.

The Four Part-Two Suit Types

Part Two exists because some claims slip past exclusive remedy. The four classic suits it covers are:

• Third-party-over actions — a third party the worker sued (e.g., a machine maker) brings the employer back in for contribution.
• Loss of consortium — a spouse sues for loss of companionship.
• Consequential bodily injury — a family member's injury consequential to the worker's (e.g., a spouse's heart attack on learning of the injury).
• Dual-capacity — the employer is sued in a second role, such as the manufacturer of the product that hurt its own employee.

If a fact pattern shows a lawsuit rather than a routine benefit claim, the answer is Part Two.

Part One vs. Part Two — The Critical Split

Part One (Workers' Compensation) pays statutory benefits the law requires — there is no dollar limit because the obligation is set by the state act, and the insurer pays whatever the statute mandates. Part Two (Employers' Liability) covers the employer's legal liability for work-related injury that falls outside the comp statute — for example, third-party-over actions, consequential injury to a family member, or dual-capacity suits. Part Two does carry limits (a common default such as 100/500/100: bodily injury by accident each accident, by disease policy limit, by disease each employee).

Who and What Part Two Excludes

Employers' Liability does not cover: liability assumed under contract, fines/penalties for statutory violations, intentional or serious-and-willful misconduct by the employer, obligations under other workers' comp laws, and injury outside the covered states. These gaps are why an employer also needs CGL and sometimes a stop-gap endorsement in monopolistic-state situations. The exam contrasts Part One's unlimited statutory payout with Part Two's limited liability payout repeatedly.

Reading the Information Page

The workers' comp Information Page (the declarations equivalent) ties the two parts together. Item 3.A lists the states where Part One statutory coverage applies; Item 3.C lists Other States insurance; Item 3.B shows the Part Two limits (the standard 100/500/100). Premium in Item 4 is estimated and subject to audit. The exam expects you to know that adding a state mid-term to Item 3.A requires an endorsement and that operations in a state listed nowhere on the Information Page may leave the employer with no coverage there.