Employers Liability Insurance: What It Covers (and Why Workers’ Comp Isn’t Enough)
Most business owners think of workers’ compensation as a single coverage that handles anything involving an injured employee. In reality, a standard workers’ compensation policy is actually built from two separate parts — and it’s the second part, Employers Liability (Coverage B), that catches the claims workers’ comp alone was never designed to handle.
If you carry workers’ comp but have never had someone explain Coverage B to you, this is worth five minutes of your time.
Workers’ Comp Has Two Parts — Most Owners Only Know About One
Coverage A – Workers’ Compensation pays statutory benefits (medical bills and lost wages) to an injured employee, regardless of fault, under Virginia’s workers’ comp laws. In exchange for these guaranteed no-fault benefits, employees generally give up the right to sue their employer directly for the injury — this trade-off is known as the “exclusive remedy” doctrine.
Coverage B – Employers Liability is the piece most business owners have never heard explained. It responds when the exclusive remedy protection doesn’t fully apply — meaning your business can still be sued, and Coverage B is what defends and pays those claims.
When Does Employers Liability Actually Get Used?
Here are the most common scenarios where Coverage B responds:
1. Third-Party-Over Actions
This is the most frequent trigger. An injured employee can’t sue their own employer directly (that’s the exclusive remedy), but they can sue a third party — a contractor, equipment manufacturer, or property owner — connected to the accident. That third party then often turns around and sues the employer, claiming the employer’s negligence contributed to the injury. This is called a “third-party-over” suit, and it’s extremely common in construction, manufacturing, and any business that regularly works alongside other contractors or vendors.
2. Loss of Consortium Claims
A spouse of an injured employee may bring a claim for loss of companionship, services, or support resulting from the injury. Since this isn’t a claim by the injured employee themselves, the exclusive remedy doctrine doesn’t automatically block it — and Employers Liability is what responds.
3. Dual-Capacity Claims
In some cases, an employer may be seen as having a second relationship with the employee beyond employer-employee — for example, also acting as the product manufacturer, property owner, or another distinct legal role. Courts have occasionally allowed suits in these situations because the employer was acting outside its normal role as “employer” at the time.
4. Consequential Bodily Injury Claims
A family member’s own injury — for example, emotional distress from witnessing a workplace accident — may fall outside standard workers’ comp benefits but still trigger a liability claim against the employer.
5. Employment Actions Not Covered by an EPLI Policy
Certain claims tied to the employment relationship but arising from the injury (not to be confused with EPLI matters like wrongful termination or harassment, which require a separate Employment Practices Liability policy) can also implicate Coverage B depending on the facts of the case.
Where Employers Get Exposed
The exposure isn’t theoretical — it shows up most in industries and situations where:
Multiple contractors work on the same site (construction, trades, property management) — because that’s exactly where third-party-over suits originate
Employers Liability limits are left at policy minimums — many policies default to relatively low limits (often $100,000/$500,000/$100,000) that haven’t been reviewed against the business’s actual size, payroll, or subcontractor exposure
A business relies solely on statutory workers’ comp limits without checking whether Coverage B limits match their overall liability program, including any umbrella or excess policy
Certificates of insurance requested by general contractors specify Employers Liability limits the current policy doesn’t actually meet — a common issue we see when businesses bid larger jobs
A Quick Gap-Check for Employers
- Do you know your current Employers Liability limits, or only your workers’ comp coverage?
- Does your business regularly work alongside other contractors or subcontractors on shared job sites?
- Have your Employers Liability limits been reviewed against your payroll, headcount, or the certificate requirements you’re regularly asked to meet?
- Does your umbrella or excess liability policy actually sit on top of your Employers Liability coverage, or is there a gap between the two?
If you’re not confident in the answer to more than one of these, it’s worth having your workers’ comp policy reviewed specifically for Coverage B — not just the statutory piece.
How Hampton Roads Insurance Can Help
As an independent agency working with multiple carriers, we regularly review Employers Liability limits as part of a broader look at a business’s full liability program — making sure workers’ comp, general liability, and any umbrella coverage are actually working together rather than leaving gaps between them.
If it’s been a while since your workers’ comp policy was reviewed — or if you’ve never had Coverage B explained to you before today — reach out to our team. We’re happy to walk through your current limits and flag anywhere you might be exposed.
This article is for informational purposes only and does not modify any insurance policy or constitute legal advice. Coverage details, limits, and availability vary by carrier and state and are subject to underwriting. Please refer to your policy documents or speak with a licensed agent for specifics on your coverage.
