Part Two: Employers Liability Insurance Explained

In the standard Workers’ Compensation and Employers Liability policy used across the United States, including Texas, the policy is divided into several sections. While Part One handles the statutory benefits mandated by state law, Part Two—known as Employers Liability—is designed to protect the employer from legal liability for employee injuries that fall outside the scope of workers' compensation statutes.

Even though workers' compensation is generally considered the "exclusive remedy" for workplace injuries, there are specific scenarios where an employee or their family members might still have the right to sue the employer. Part Two provides the defense costs and payment for damages in these specific lawsuits. Understanding the nuances of Part Two is critical for passing the complete TX General exam guide.

Employers Liability insurance is triggered when an employer is sued for damages due to a bodily injury by accident or disease. For the Texas General Lines exam, you should be familiar with the four primary types of claims covered under Part Two:

• Third-Party Over Actions: This occurs when an injured employee sues a third party (such as a machine manufacturer), and that third party then sues the employer for contributory negligence.
• Dual Capacity: This claim arises if the employer was acting in a capacity other than just an employer. For example, if an employee is injured by a product manufactured by the employer that is also sold to the general public.
• Care and Loss of Services: These are suits brought by an employee’s spouse or family members for the loss of the employee's companionship or consortium due to a work-related injury.
• Consequential Bodily Injury: This covers claims by a family member who suffers a physical injury as a direct result of the employee's injury (e.g., a spouse suffering a heart attack upon hearing of the employee’s severe accident).

Part Two contains several exclusions that are frequently tested. It is important to remember that Employers Liability is not a "catch-all" for every lawsuit. Major exclusions include:

• Statutory Obligations: Any obligation that should be covered under workers' compensation, disability benefits, or unemployment laws.
• Contractual Liability: Liability assumed under a contract (though this may be covered under a General Liability policy).
• Intentional Injury: Bodily injury intentionally caused or aggravated by the employer.
• Employment Practices: Damages arising out of termination, discrimination, or harassment (this requires Employment Practices Liability Insurance, or EPLI).
• Punitive Damages: Most policies exclude fines, penalties, or punitive damages imposed because of a violation of law.
• Injuries Occurring Outside the Coverage Territory: Generally, the injury must occur in the United States, its territories, or Canada.