Glossary · PA Workers' Comp

Employer Liability (Part 2 of Workers' Comp)

The second coverage part of a workers' comp policy protecting employers from lawsuits related to work injuries — coverage limits are selected at policy inception.

Definition

Employer Liability insurance — also called Part 2 of the workers' compensation policy — protects employers from lawsuits brought by injured employees or their families that fall outside the exclusive remedy of workers' comp.

Employer Liability Coverage: When It Applies and What Limits to Carry

In Pennsylvania and most states, workers' comp provides the "exclusive remedy" for workplace injuries — meaning employees generally cannot sue their employer in tort for a work injury. However, there are exceptions: third-party actions, dual-capacity suits, and claims involving intentional torts.

Employer Liability coverage responds when an injured worker brings a lawsuit that falls outside the exclusive remedy — most commonly in construction (where multiple parties are on a job site) and in cases involving serious misconduct.

Common employer liability limits in Pennsylvania are 100/500/100 ($100,000 per occurrence, $500,000 policy aggregate, $100,000 per employee for disease). Higher limits (500/500/500 or 1000/1000/1000) may be required by contracts and are appropriate for higher-hazard industries.

The employer liability surcharge (ELF) is a small percentage adjustment to premium that varies based on the limits selected. Higher limits cost modestly more.