The short answer
Employers liability insurance is Part Two of a standard workers’ compensation policy. It pays your legal defense and any damages when an employee’s work injury or illness turns into a lawsuit that workers’ comp benefits don’t cover, like a spouse’s claim or an outside company suing you over your employee’s injury.
Let’s say your food pantry driver gets hurt unloading at a partner’s warehouse. Workers’ comp pays the medical bills. Then the driver sues the warehouse, and the warehouse sues you. That second lawsuit is what employers liability insurance is for.
How Does Employers Liability Insurance Work?
Employers liability insurance sits inside your workers’ compensation policy as “Part Two.” Part One pays the benefits your state requires when an employee is hurt on the job. Part Two steps in when that same injury leads to a lawsuit against your organization, and pays for your attorney plus any settlement or judgment, up to the limit.
In most states, workers’ comp is the “exclusive remedy.” That’s a legal way of saying an injured employee generally takes the comp benefits and can’t also sue the employer. Most claims stop there. Employers liability covers the exceptions. With 2.5 million workplace injuries and illnesses reported in 2024, they add up.
To be honest, most nonprofit leaders don’t know they have it until I point to it on their policy.
What Does Employers Liability Insurance Cover?
The standard NCCI policy form (from the National Council on Compensation Insurance) lists four kinds of damages it pays, and several it won’t.
Usually covered
- Third-party-over claims. An injured employee sues someone else, and that party sues you, like the warehouse above.
- Loss of care and services. A spouse claims they lost the injured worker’s help and companionship, often called “loss of consortium.”
- Consequential bodily injury. A spouse, child, parent or sibling is harmed as a direct result of the employee’s work injury.
- Dual capacity. You’re sued in a role other than employer, like owner of the building where it happened.
Not covered
- Injuries you cause on purpose
- Harassment, discrimination, wrongful termination and other personnel decisions (that’s EPLI)
- Fines or penalties
- Liability you take on by contract
Is Employers Liability the Same as Workers’ Compensation?
No. They’re two parts of the same policy that do different jobs. Workers’ compensation pays required benefits, like medical bills and lost wages, no matter who was at fault. Employers liability pays to defend lawsuits tied to a work injury that fall outside those benefits. One pays the worker. The other protects the organization.
| Question | Workers’ comp (Part One) | Employers liability (Part Two) | EPLI |
|---|---|---|---|
| What triggers it | An employee is hurt or gets sick on the job | A work injury turns into a lawsuit | A claim about hiring, firing or treatment at work |
| What it pays | Medical bills, lost wages, death benefits | Defense, settlements, judgments | Defense, settlements, judgments |
| Usually included in a workers’ comp policy | Yes | Yes | No |
What Are Employers Liability Limits?
Employers liability limits are written as three numbers. The standard minimum is 100/500/100: $100,000 for each accident, $500,000 for all disease claims in the policy year, and $100,000 for each employee with a disease claim. You can (and should) buy higher limits, as the increased cost is usually negligible compared to the increased protection. We always recommend $1,000,000.
| Limit | What it means | Standard minimum |
|---|---|---|
| Bodily injury by accident | Most paid per accident, however many are hurt | $100,000 |
| Bodily injury by disease, policy limit | Most paid for all disease claims in a policy year | $500,000 |
| Bodily injury by disease, each employee | Most paid for one employee’s disease claim | $100,000 |
One detail seems minor but matters a lot. On the standard form, defense costs are paid on top of the limit. With EPLI, legal bills usually eat into it.
Does General Liability Cover Employee Injuries?
Usually not. Standard general liability insurance excludes injuries to your own employees, because workers’ comp and employers liability are built to handle them. General liability covers injuries to the public, like a guest who trips at your gala. Employee injuries belong on the workers’ comp policy.
What Employers Liability Means for Nonprofits
Volunteers usually aren’t employees. In most states, unpaid volunteers fall outside workers’ comp, so Part Two won’t respond if a volunteer is hurt. That gap is what volunteer accident and liability insurance fills.
Small staffs still count. In Georgia, workers’ comp is required once you regularly have three or more employees, and part-time staff can count. If you have workers’ comp, you almost always have employers liability with it.
Your umbrella extends coverage. Most umbrella policies sit on top of your employers liability limit to increase the available coverage.
In my opinion, the biggest lever is simple: check these limits once a year. Three things worth doing this week:
- Find “Part Two” or “Employers Liability” on your workers’ comp declarations page, the summary at the front of the policy.
- Compare those three numbers to what any lease or grant contract require.
- Ask whether your volunteers have any coverage at all.
Employers Liability FAQs
Is employers liability insurance required?
Usually not on its own. It comes built into a standard workers’ comp policy, which most states require once you have employees. In Ohio, Washington, North Dakota and Wyoming, the state fund doesn’t include it, so employers buy it separately as “stop-gap” coverage.
How much does employers liability insurance cost?
It’s priced inside your workers’ comp premium, so most nonprofits never see a separate charge. The quickest way to get your real number is to ask us.
Does employers liability cover volunteers?
Usually not. It covers employees, and most states don’t treat unpaid volunteers as employees. Some states let a nonprofit choose to cover volunteers under workers’ comp. Otherwise, volunteer accident insurance is the usual answer.
About the author
Parker Berman is co-founder of Nonprofit Insuror South. He has worked in commercial property and casualty insurance since 2017, with a focus on nonprofits, and holds a B.B.A. in Risk Management and Insurance from the University of Georgia.
Not sure what your limits are?
Send us your declarations page, and we’re happy to take a look at your workers’ comp and employers liability coverage.