Everyone knows that machinists, construction workers, truckers and auto mechanics work in industries that carry significant workplace risks. But what about telephone receptionists, secretaries, graphic designers or database administrators? What about florists, caterers, wedding planners, hotel chefs? The truth is, every workplace carries risks, which is the reason behind employers liability insurance.
Employer’s liability insurance is defined as a type of policy intended to protect employers from having to pay financial costs related to employee’s injuries, illnesses or even death in the workplace.
For instance, suppose somebody spills their coffee in the employees’ break room and fails to clean up the spill promptly. A co-worker comes along, slips in the spilled coffee, and falls hard to the tile floor, breaking a hip.
The employer is legally liable for the employee’s injury and any losses resulting from it, such as medical expenses or lost pay. That’s the reason for employer’s liability insurance.
Employer’s liability insurance comes under a classification called “risk financing.” Today many large corporations, and even small- or medium-sized companies, employ people to monitor the business for potential liability and manage its insurance policies. These employees are known as risk managers.
Today there are many insurance carriers like Lloyd’s that specialize in liability insurance. Large and even some medium-sized companies have an employee, or an entire department devoted to managing workplace risk. The job of risk managers is to whose job is to keep tabs on potential liabilities and to administer liability insurance.
In employer’s liability insurance, the business owner pays a premium to the insurance carrier to be protected against an employee’s loss due to workplace injury or accident. This is called a “third-party claim” in the insurance industry, since the claimant is legally not a party to the insurance contract. Usually an employee injured on the job seeks to get back any uncovered medical expenses, lost wages or other economic losses as the result of a workplace injury or illness caused by working conditions.
However, if the liability situation is less clear-cut, an insurance company may elect to defend the insured in court rather than pay the claim. An expensive legal battle might follow to determine who actually is responsible for the accident that caused the employee’s injury.
Many higher risk employees are engaged in one of the businesses that are typically required to have employer’s liability insurance. Others include building contractors, factories, counselors, physicians and other professionals. The deciding factor in all cases is whether the individual or company engages in a type of business likely to put employees at risk.
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