What is the importance of "employer's liability" insurance?

Employer's liability insurance is crucial because it provides coverage for costs associated with employee claims for work-related injuries that are not addressed by workers' compensation. Workers' compensation typically covers medical expenses and lost wages for injured employees, but there are scenarios where an employee might pursue further legal action against their employer. This can occur, for instance, if the employee claims that the injury was a result of the employer's negligence.

By having employer's liability insurance, businesses are safeguarded against the significant financial burden that can arise from legal claims, including legal fees and any settlements or judgments against them. This form of insurance essentially fills in the gaps left by workers' compensation in protecting employers from the financial impacts related to work injuries.

While some options may mention important aspects, such as litigation costs or health benefits, they do not specifically address the unique role that employer's liability insurance plays in relation to workers' compensation coverage. It is necessary to ensure that businesses have adequate protection in place for potential claims that fall outside of the standard workers' compensation framework.