Employer’s Liability Insurance vs. Workers’ Compensation (Explained)

Employer’s liability insurance covers the cost of a lawsuit if an employee sues their employer over a work injury or occupational disease. Workers’ compensation insurance provides benefits, such as wage replacement and medical care payments, to eligible workers who suffer a work injury and file a successful claim. An employer’s liability insurance policy is sometimes part of a workers’ compensation plan. Other times, the two policies are separate and distinct, providing extra coverage to employers when workers experience injuries. 

Pennsylvania law requires most employers to carry workers’ compensation insurance unless they choose to self-insure or do not have eligible employees. If a Pennsylvania employer fails to provide sufficient workers’ compensation coverage, an injured worker may be able to file a lawsuit to pursue the financial support they are entitled to under the law. 

Krasno Krasno & Onwudinjo exclusively fights for injured workers pursuing workers’ compensation or Social Security disability benefits under federal or Pennsylvania law. Since the 1930s, our firm has proudly stood by workers who suffer on-the-job injuries and need financial support and space to heal. We fight for their legal right to financial and medical support to maximize their chance of successfully recovering from their injuries and safely returning to work. If the worker cannot return to work, our Pennsylvania workers’ compensation lawyers tirelessly advocate for them so they have the support they need. 

What Is Employer’s Liability Insurance? 

Employer’s liability insurance can be a standalone policy that comes into play when a worker suffers an injury and files a lawsuit against the employer. Or it can be part of a comprehensive workers’ compensation insurance plan that covers the employer’s expenses (i.e., attorneys’ fees) during a workers’ comp case. The type of plan depends on the applicable law and the state in which the policy is issued. 

How Does Employer Liability Insurance Work? 

Employer liability insurance covers the employer’s costs if an employee files a lawsuit because of a work injury or occupational disease. In some cases, it can also cover the cost of a personal injury or workers’ compensation settlement by paying lost wages or other damages to the injured worker or their surviving family members. The specific mechanics of these policies depends on the type of coverage they provide. Some are standalone policies, and others are a subset of a comprehensive workers’ comp plan. 

Is Employer’s Liability Insurance the Same as Workers’ Compensation?

Employer’s liability insurance is not always the same as workers’ compensation insurance. But, in some cases, an employer liability policy may include a workers’ compensation policy or vice versa. It depends on the applicable law and the specific insurance company. Because both policies come into play when a worker takes action after suffering a work injury, the insurance company may provide a bundled option. 

Is Employers’ Liability Insurance the Same as General Liability Insurance? 

Employer’s liability insurance is not the same as general liability insurance. Employer’s liability insurance typically applies when a worker suffers a job-related injury and files a lawsuit. In contrast, a general liability insurance policy insures the business against claims of property damage, bodily injury, or reputational harm. For example, general liability insurance might come into play if a customer is injured on company property and files a lawsuit against the business. Both are important for employers to carry, but each serves a different purpose. 

What Is Workers’ Compensation Insurance?

Workers’ compensation insurance provides benefits to eligible employees when they suffer a work injury and file a timely claim. Pennsylvania requires most employers to carry this insurance coverage if they have employees. Pennsylvania’s workers’ compensation laws do not require employees to prove that their employer caused the accident to be eligible for benefits. In exchange for this benefit, the employee typically cannot sue the employer for a work injury. As always, exceptions may apply, but this is the case in most situations. 

What Types of Claims Does Workers’ Comp Cover?

Under Pennsylvania’s Workers’ Compensation Act, most on-the-job injuries that result in the worker’s inability to perform their job for more than one day are covered by the workers’ comp system. Conditions that may be covered under the workers’ compensation insurance policy include:

  • Slips, trips, and falls, 
  • Electrocution, 
  • Burns, 
  • Carpal tunnel syndrome
  • Cancer,
  • Eye injuries, 
  • Concussions,  
  • Chemical burns, and 
  • Broken bones. 

Further, to be eligible to receive benefits, the employee must not have intentionally caused their injuries (such as by performing their job while intoxicated) or acted outside the scope of their job duties (such as roughhousing). Workers must also notify their employer of their injury within 21 days after the work accident or after they discover their condition is work-related. Employees may have up to 120 days to meet this reporting obligation. If they have a work-related progressive disease, they may be able to file a claim more than 120 days after they discover the injury or realize it is from their job. 

What Does a Workers’ Comp Settlement Include?

A workers’ compensation settlement typically includes benefits to cover the employee’s lost wages and medical bills. The compensation you may receive in a workers’ comp settlement includes the following:

  • Wage replacement benefits (typically two-thirds of your weekly wage, subject to limitations); 
  • Medical care; 
  • Specific loss benefits (if you experience a loss such as an amputated thumb or other specifically named injury); and 
  • Death benefits (if your loved one dies because of a work injury). 

A workers’ compensation attorney can help you create an effective legal strategy to maximize your benefits so you can support yourself and get the medical care you need while you recover. In Pennsylvania, injured workers can usually choose their doctor unless their employer grants their benefits claim and posts a list of six qualified doctors. 

Do Pennsylvania Employers Need to Carry Workers’ Compensation, or Can They Opt Out?

Pennsylvania law requires that most employers carry workers’ compensation. But they do not need to maintain coverage if they do not have employees or if the only people who work for them are independent contractors under current law. Workers are presumed employees unless they meet the legal criteria for an independent contractor, meaning that the relationship between the parties rather than their title determines whether the worker is a contractor.

Pennsylvania law allows certain employers to choose to carry self-insurance rather than take out a workers’ compensation policy. If they choose this route, the Pennsylvania government generally must approve the plan, and it is up to the employer to provide sufficient coverage for injured workers. If an employee is hurt at work and the employer’s self-insurance plan is insufficient to cover the injuries, the employer may still be responsible for providing the minimum coverage. 

What Is the Difference Between Employer Liability Coverage and Workers’ Compensation in Pennsylvania?

Employer liability insurance covers the employer’s expenses in a work injury lawsuit, whereas workers’ compensation insurance provides benefits to employees who suffer work-related injuries. Pennsylvania law requires most employers to carry workers’ compensation coverage. The policy may include employer liability insurance to cover the employer’s expenses for a work injury claim or the costs of a lawsuit over a work injury. In most cases, Pennsylvania law does not allow workers to file lawsuits against their employers if they have workers’ compensation insurance. But an exception may apply where the worker may do so. For example, if the employer intentionally harms the employee outside of work, the worker may be able to file a lawsuit. 

What Employers Are Liable for a Worker’s Injury?

Pennsylvania employers must provide benefits (such as wage replacement deposits and medical care) for workers who suffer job-related injuries. Under Pennsylvania law, employers must carry sufficient workers’ compensation insurance policy through a state-provided plan, a private insurance carrier, or by carrying approved self-insurance. 

Employers with insufficient coverage or who fail to have coverage may still be liable for injuries their workers experience and thus may be on the hook to pay wage replacement benefits and medical care. The exception is if the worker or business is exempt. For example, independent contractors may not be eligible for workers’ compensation benefits unless their employee misclassifies them as a contractor when they are actually an employee. 

An Experienced PA Workers’ Compensation Attorney Can Help

Navigating Pennsylvania’s complex workers’ compensation system can be difficult, especially if you are recovering from a work injury. Going through the process alone can be tiresome and result in missteps that cause delays or prevent you from getting the compensation you deserve. 

Our attorneys have decades of experience helping workers reclaim their dignity and get the help they need after they are injured on the job. We help coal miners, teachers, plumbers, construction workers, and other hard-working folks obtain the financial and medical assistance they are entitled to under Pennsylvania law. Saad Aslam has over 18 years of experience litigating even the most complex workers’ compensation claims and is a force to be reckoned with in the courtroom. 

If you experienced a work injury, contact our office today by calling 844-243-4843 or filling out an online contact form to schedule a free, no-obligation consultation.

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