Workers Compensation and Employers Liability Insurance

Liability & Insurance 750

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Covers an employer for employee injury sustained on the job, without regard to fault or liability.
Insurance is mandated by the state; all states have WC laws.
Because of the WC benefits, employees can’t sue the employer, even if the injury or illness was a result of the employer’s negligence. There are some exceptions that permit employee suits
All employees are entitled to WC benefits unless subject to an exception under the Labor Code. Certain workers are not defined as employees by the Labor Code
Statutory WC benefits:
- medical and hospital benefits reasonably necessary to cure or relieve from the effects of the injury.
- temporary disability if the injury or condition requires the employee to miss more than three days of work or causes hospitalization.
- permanent disability if the injury or condition results in permanent impairment.
- supplemental job displacement benefit: a “voucher” which can only be used for a training school.
- death benefits

A sole proprietor (or husband & wife) with no employees.
A corporation, if all employees, including corporate officers and directors, are the sole owners.
A limited liability company, if its only employees are its managers.
A partnership, if its only working members are general partners.
Independent contractors are not entitled to WC benefits. Employee vs. Independent Contractor.
A vendor may claim that it has no employees, only independent contractors. If one of them gets hurt on the job and tries to claim WC benefits, the Workers Compensation Appeals Board may determine that the injured worker is actually an employee that is entitled to benefits. If our vendor does not have WC, we may be required to pay the WC benefits.
When we are concerned about a vendor’s statement that there are no employees, we ask the vendor to sign the Declaration of No Employees (Word: 25 kB).

Liability insurance that covers employers for claims resulting from workers’ job-related injuries or illnesses that workers compensation doesn't cover. Example: a healthcare worker becomes HIV positive from work-related contact with a patient. The healthcare worker’s illness is covered by WC. However, if the worker’s spouse then becomes HIV positive because of contact with the healthcare worker, the spouse is not entitled to WC benefits.
Coverage is usually provided as Part B of a WC policy.

Subrogation is the right for an insurer to pursue a third party that caused an insurance loss to the insured. This is done as a means of recovering the amount of the claim paid to the insured for the loss.
The employer’s WC policy pays statutory benefits to the injured worker regardless of negligence on the part of the employer or any outside party.
If the employee’s injury has resulted from an outside party’s negligence, the insurer has the right to seek recovery from that party.
A subrogation waiver endorsement prohibits our vendor’s WC insurer from seeking reimbursement from us.
Because many WC insurers make a charge for this endorsement, we require it only in the Toolkit Templates used for higher risk agreements.
See Toolkit Sample Form 2.