Employers Liability Insurance vs. Workers Compensation

What is Workers Compensation Insurance?

Workers compensation insurance is commonly known as employees compensation insurance or workmen insurance. It is a commercial insurance policy. It mainly covers the legal liability towards its employer by providing compensation in case of an accident that causes injury or kills the employee during employment. It also covers diseases caused or aggravated due to employment conditions.

For example, if one of your employees/workers fractured his hand in the factory while operating machinery. Then, in this case, the workers compensation insurance can help pay for the treatment as a means of compensation.

What is Employers Liability Insurance?

Employers liability insurance is also a type of commercial insurance that provides financial protection to the employers if an employee sues the employer for a work-related injury. Additionally, this insurance also covers the legal cost and third-party claims.

In continuation with the above example, if the employee/ worker feels that workers compensation didn't cover all the expenses, then the worker can file a lawsuit against the employer for poor machinery. The legal cost incurred by the employer (whether or not the employer is liable) can be covered under employers liability insurance.

Difference Between Employers Liability and Workers Compensation

Since both these policies are designed on similar lines, it is pretty natural to get confused between them. We have already stated the basic idea of both the policies with an example for better understanding. Further, we shall look at the differences between them. 

Conclusion

There is a major similarity between workers compensation insurance and employers liability insurance. Both cover workplace-related injuries or illness, but in different aspects. But, when it comes to practice, they are highly complementary. It is to be noted that these policies work in tandem to protect businesses from expenses related to employee injuries.