Understanding Employer's Liability Insurance Cost

As an employer, ensuring the safety and well-being of your employees isn’t just a moral responsibility—it’s a legal obligation. While workplace safety measures can reduce risks, they can never eliminate them entirely. Accidents, injuries, or illnesses can occur unexpectedly, leaving your business exposed to financial losses and potential lawsuits.

According to a report by the National Safety Council, workplace injuries cost U.S. businesses over $167 billion annually, highlighting the substantial financial burden a single incident can impose.

Protecting your employees means protecting your business, and having the right safeguards in place ensures you’re ready for whatever comes your way.

In this post, we’ll explain how employer liability insurance serves as a vital safety net, explaining what it is, what it covers, and why it’s indispensable for businesses of all sizes.

What is Employer’s Liability Insurance?

Employer’s liability insurance protects businesses from financial losses if a worker files a lawsuit due to work-related harm, illness, or death. While workers’ compensation covers most workplace incidents, it doesn’t account for all potential claims.

Employer’s liability insurance bridges this gap by providing additional protection when claims fall outside the scope of workers’ compensation.

What Does Employer’s Liability Insurance Cover?

While workers’ compensation focuses on covering immediate costs like medical bills and lost wages, employer’s liability insurance goes a step further to shield your business against additional legal claims and complex lawsuits.

Here’s what this essential coverage typically includes:

• Third-party lawsuits: If an employee sues a third party (e.g., a contractor or equipment manufacturer) for causing their injury, the third party can, in turn, sue your business for negligence. Employer’s liability insurance covers the legal costs and settlements in such scenarios.
• Loss of consortium claims: If an injured employee’s spouse or family claims they’ve lost companionship, support, or financial stability due to the injury, this insurance helps cover related legal expenses and settlements.
• Consequential bodily injury claims: If a non-employee, such as a family member, develops an illness or injury due to caring for an injured employee, employer’s liability insurance can cover these claims as well.
• Dual-capacity lawsuits: If your business is found liable in multiple capacities (e.g., as both an employer and a product manufacturer), this insurance covers the associated legal and financial liabilities.

Real-world Example of Coverage:

Imagine an employee suffers a serious injury at work due to faulty equipment. The employee sues the equipment manufacturer, who then files a claim against your business, alleging that improper maintenance contributed to the accident.

In such a situation, employer’s liability insurance would cover your legal defense, settlement, or any judgment awarded against your business.

What Does Employer’s Liability Insurance Not Cover?

While employer’s liability insurance provides critical protection for businesses, it doesn’t cover everything. Understanding these exclusions helps ensure you have the right combination of policies to fully protect your business. Here are the common areas not covered:

• Intentional acts or criminal behavior: Claims arising from deliberate harm, illegal actions, or intentional misconduct by the employer are not covered by employer’s liability insurance.
• Employee injuries already covered by workers’ compensation: If an employee’s claim is fully addressed under workers’ compensation, employer’s liability insurance doesn’t apply. This policy is designed to handle claims beyond standard workers’ compensation coverage.
• Injuries outside the scope of employment: These claims won't be covered if an employee is injured during activities unrelated to their work duties, such as commuting to and from the workplace.
• Claims related to contractual obligations: Employer’s liability insurance doesn’t cover liabilities arising from breach of contract or failure to meet contractual agreements.
• Damages to property: While this insurance protects against bodily injuries or illnesses, it does not cover damages to the employer’s property or the employee’s personal belongings.
• Specific exclusions listed in the policy: Each insurance policy has its own set of exclusions, such as liabilities related to asbestos exposure, pollution, or certain high-risk activities.

Understanding what isn’t covered allows you to identify potential gaps in protection. For example, damages to your property would require commercial property insurance, while pollution-related liabilities might need a separate environmental liability policy.

At TWFG Khan Insurance, we help you pair employer’s liability insurance with the right complementary policies, ensuring your business is protected from all angles. 

Our experts help you identify potential gaps in coverage and recommend tailored solutions to keep your business and employees safeguarded. With access to top-rated carriers and industry-specific expertise, we ensure your policies align perfectly with your unique needs.

How Much Does Employer’s Liability Insurance Cost?

The cost of employer’s liability insurance varies based on several factors unique to your business. While there’s no one-size-fits-all answer, understanding the elements affecting pricing can help you make informed decisions and manage your budget effectively.

Average Costs

Although premiums differ by industry and business size, here are some general benchmarks:

• Low-risk industries (e.g., retail, office-based businesses): $100 to $200 per employee annually.
• Moderate-risk industries (e.g., delivery services, light manufacturing): $300 to $500 per employee annually.
• High-risk industries (e.g., construction, heavy manufacturing): $600 or more per employee annually.

Factors that affect the cost:

1. Industry type: Businesses in high-risk industries, such as construction or manufacturing, often pay higher premiums due to the greater likelihood of workplace injuries.
2. Number of employees: Larger workforces increase the risk exposure for insurers, leading to higher premiums.
3. Claims history: A history of regular or costly claims can raise your premiums, as it signals higher risk to insurers.
4. Coverage limits: Higher policy limits offer greater protection but come with increased costs.
5. Workplace safety measures: Businesses with robust safety protocols may benefit from lower premiums as they reduce the likelihood of claims.

How to Lower Your Costs

• Invest in workplace safety: Implementing safety protocols and training programs can reduce the risk of injuries and signal lower risk to insurers.
• Bundle policies: Combining employer’s liability insurance with other business policies, like general liability or workers’ compensation, can lower your overall premium.
• Review your coverage limits: Ensure you’re not over-insuring by assessing the right amount of coverage for your business needs.
• Work with a reliable insurance company: An experienced insurance company can help you find tailored coverage at competitive rates.

At TWFG Khan Insurance, we understand that managing costs is just as important as securing the right coverage. Our team specialises in helping businesses find employer’s liability insurance that balances comprehensive protection with competitive rates. 

By partnering with top-rated carriers, we ensure you get the best value for your investment while safeguarding your business and employees.

How Can You Get Employer’s Liability Insurance?

Getting employer’s liability insurance is a straightforward process, but it’s important to ensure that you select the right policy for your business needs. Here’s a step-by-step guide to help you:

1. Assess Your Business Risks

Start by evaluating the potential risks your employees face. Consider:

• The type of work they do (physical labour vs. desk jobs).
• The likelihood of workplace accidents or illnesses.
• Past incidents or claims your business has experienced.

Understanding your risk profile will allow you choose the proper coverage.

2. Contact a Reliable Insurance Provider

Reach out to a trusted insurance company like TWFG Khan Insurance, which specialises in business insurance. They can:

• Explain the coverage options available.
• Help you determine the appropriate limits for your policy.
• Recommend additional coverage if needed, such as workers’ compensation or general liability insurance.

3. Compare Quotes

Get quotes from multiple insurance providers to compare pricing and coverage. Look for:

• Policy inclusions and exclusions.
• Premiums and deductibles.
• Coverage limits and additional benefits.

This ensures you get the best value for your investment.

4. Review and Customise Your Policy

Work with your insurance provider to tailor your policy to your precise needs. Ensure your policy covers:

• Legal fees and settlements for employee claims.
• Medical expenses not included in workers’ compensation.
• Any additional risks unique to your business operations.

5. Finalise and Purchase the Policy

Once you’ve chosen a policy, complete the application process with your insurer. Provide accurate business information, including:

• The number of employees.
• Payroll details.
• Business operations and risk factors.

After approval, your policy will be active, offering the protection your business needs.

6. Regularly Review Your Coverage

Review your employer’s liability insurance to ensure it remains adequate as your business expands or changes. Update your policy if:

• You hire more employees.
• Your business expands into new areas or industries.
• Workplace risks evolve.

Why Choose TWFG Khan Insurance for Employer’s Liability Coverage?

At TWFG Khan Insurance, we know that every business faces unique risks, especially when it comes to protecting employees. Finding the right employer’s liability insurance doesn’t have to be complicated. Our extensive experience and tailored approach ensure you get the coverage your business needs to stay protected.

What Sets Us Apart?

• Customised Coverage for Your Industry: Whether you’re in construction, oil and gas, maritime, or any other sector, we design policies that address your industry's specific challenges.
• Comprehensive Risk Assessment: Our team works closely with you to evaluate your business risks, ensuring your policy provides the right level of protection without unnecessary add-ons.
• Expert Support, Every Step of the Way: With our knowledgeable agents by your side, you’ll gain clarity on complex insurance terms and coverage options, making the decision-making process smooth and stress-free.
• Access to Leading Carriers: We partner with top-rated insurance providers to offer you the most reliable and competitive plans on the market.

When you choose TWFG Khan Insurance, you’re not just getting a policy—you’re securing a trusted partner who prioritises your business’s safety and success.

Get a quote with us today to learn how we can help you safeguard your business and employees with employer’s liability insurance tailored to your needs.