What is the Difference Between Workers Comp and Employers Liability?

Work injuries are not uncommon throughout our region. Regardless of what type of work a person is involved in, there is always a risk that an employee can sustain an injury or illness. Whether you work in the trucking industry, in agriculture, in fisheries, or at an office complex, there are ways to sustain injuries. When an injury occurs in a workplace in Oregon, most people understand that the injured employee will receive workers’ compensation benefits. These benefits are designed to protect both the worker and the employer. However, most people are not aware that there are two parts to a workers’ compensation insurance policy – the actual workers’ compensation as well as employer’s liability insurance.

Employer’s liability insurance is part of workers’ compensation insurance

Most employees probably do not know that workers’ compensation insurance usually has two parts:

1. Workers’ compensation insurance. This pays for medical expenses and lost wages caused by a work-related injury or illness.
2. Employer’s liability insurance. This type of coverage provides the owner of the business protection if the company’s negligence is blamed for the employee’s injury or illness.

It is important to pause here and discuss what most people need to understand about workers’ compensation insurance. This type of insurance is considered “no-fault,” meaning that the injured worker will typically be entitled to receive coverage for their medical expenses and lost wages regardless of who caused the injury, whether it be a coworker or the injured individual themselves.

However, there are times when the employer faces a lawsuit from the injured worker if it is suspected that the employer caused the injury or illness in question. That is where the employer’s liability insurance comes in. This type of insurance is designed to cover the legal defense costs that an employer may face if the employee blames the business for their injury. These costs could include hiring an attorney, court fees, as well as paying a settlement or judgment.

Let us use some examples to see when these types of insurance would kick in. Suppose for a moment that a data entry clerk claims that they have developed carpal tunnel syndrome due to their constant typing. Or perhaps a line cook in a restaurant gets burned as a result of hot fryer grease. In either of these situations, workers’ compensation insurance will pay for the medical bills and part of the lost wages while the injured employee recovers.

However, if an injured employee thinks that the negligence of the business itself directly caused the injury or illness they are suffering from, they may want to file for additional compensation, such as pain and suffering or punitive damages. If this happens, and if the employee is allowed to proceed with the lawsuit outside of the workers’ compensation system, the employer’s liability insurance will kick in to cover this type of claim.

While the vast majority of work injury claims are covered by workers’ compensation insurance, the added protection of employer’s liability insurance must be considered in order to protect the business in the event an additional lawsuit is filed. The reality is that most businesses do face work injury lawsuits at some point during their operation, so carrying both types of insurance could be vital in allowing the continued operation of a company.