With Employers Liability Insurance You Have Protection From Employee Lawsuits
Accidents can happen in a split-second, even to business owners who take every precaution to create a safe workplace. That's the reason that many states require business owners to have employers liability insurance.
Employer's liability insurance is designed to shield employers from losses incurred by employees as a result of on-the-job injuries, illnesses resulting from workplace conditions, or death as a result of a work practice or accident.
Consider this scenario: A printing employee spills some ink while filling the wells of a printing press. As he turns to get something to wipe up the spill, a co-worker slips in the liquid, falls and breaks a wrist. Even though the incident is clearly an accident, the employer could be held liable for the employee's injury.
And it's for these expected and unexpected cases of risk that employer's liability insurance was created.
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.
The practice of risk financing, or liability insurance, can be traced back 300 years ago. That's when shipping company owners in England banded together to create a fund to repay all of the subscribers whose ships went down at sea. This group began at Edward Lloyd's Coffee House, and subsequently evolved into the famous insurance company Lloyd's of London. Today many insurance companies have followed pioneering Lloyd's into the specialty of liability insurance.
In the case of employer's liability insurance, the business owner pays a premium to an insurance carrier for protection against employee claims, also called "third-party claims." Third-party claims are those brought by others outside the contract between the business owner and the insurance carrier. In the above scenario, the injured employee could demand that the employer's liability insurance pay for his or her medical expenses and any lost wages. It might even be to the business owner's advantage for the employee to file such a claim with the insurance company, instead of paying for the employee's losses from business income.
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.
Certain businesses, such as transportation companies, factories, building contractors, various types of professionals and factories often are required to have employer's liability insurance. That's because there's an inherent risk in their type of business that could result in injury, so the local or state government seeks to protect employees from the outset.
Employer's liability insurance is designed to shield employers from losses incurred by employees as a result of on-the-job injuries, illnesses resulting from workplace conditions, or death as a result of a work practice or accident.
Consider this scenario: A printing employee spills some ink while filling the wells of a printing press. As he turns to get something to wipe up the spill, a co-worker slips in the liquid, falls and breaks a wrist. Even though the incident is clearly an accident, the employer could be held liable for the employee's injury.
And it's for these expected and unexpected cases of risk that employer's liability insurance was created.
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.
The practice of risk financing, or liability insurance, can be traced back 300 years ago. That's when shipping company owners in England banded together to create a fund to repay all of the subscribers whose ships went down at sea. This group began at Edward Lloyd's Coffee House, and subsequently evolved into the famous insurance company Lloyd's of London. Today many insurance companies have followed pioneering Lloyd's into the specialty of liability insurance.
In the case of employer's liability insurance, the business owner pays a premium to an insurance carrier for protection against employee claims, also called "third-party claims." Third-party claims are those brought by others outside the contract between the business owner and the insurance carrier. In the above scenario, the injured employee could demand that the employer's liability insurance pay for his or her medical expenses and any lost wages. It might even be to the business owner's advantage for the employee to file such a claim with the insurance company, instead of paying for the employee's losses from business income.
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.
Certain businesses, such as transportation companies, factories, building contractors, various types of professionals and factories often are required to have employer's liability insurance. That's because there's an inherent risk in their type of business that could result in injury, so the local or state government seeks to protect employees from the outset.
About the Author:
One type of liability insurance you might need for your business is employers liability insurance. Another type is directors and officers insurance which protects management personnel.
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