Understanding the Difference Between Workers’ Compensation and Employers’ Liability Insurance in Washington State
As a business owner in Washington State, securing the right insurance coverage is essential to protecting both your company and your employees. Two critical types of business insurance that often cause confusion are Workers’ Compensation Insurance and Employers’ Liability Insurance. These coverages serve distinct purposes and should not be mistaken for Employment Practices Liability Insurance (EPLI), which covers different risks related to employment practices.
What is Workers’ Compensation Insurance?
Workers’ compensation is a state-mandated insurance program that provides benefits to employees who suffer work-related injuries or illnesses. This policy covers:
- Medical Expenses – Pays for necessary medical treatment related to workplace injuries.
- Lost Wages – Provides compensation for a portion of an employee’s lost income during recovery.
- Rehabilitation Costs – Covers physical therapy and other rehabilitation services.
- Death Benefits – Provides financial support to dependents of an employee who dies due to a workplace incident.
Workers’ compensation is a no-fault system, meaning employees receive benefits regardless of who was responsible for the injury. In exchange, employees typically waive their right to sue the employer for negligence.
Workers’ Compensation in Washington State
In Washington State, workers’ compensation insurance is only available through the Department of Labor and Industries (L&I). Unlike most states where private insurers can provide workers’ compensation, Washington businesses must obtain coverage directly through L&I to remain compliant.
What is Employers’ Liability Insurance?
Employers’ liability insurance provides additional protection for businesses against lawsuits brought by employees (or their families) who believe negligence contributed to their injury or illness. This coverage is crucial for mitigating legal risks that workers’ compensation alone does not cover.
Employers’ liability insurance covers:
- Legal Defense Costs – Pays for the employer’s legal expenses if sued.
- Settlements or Judgments – Covers amounts awarded to the employee if the employer is found liable.
- Third-Party Claims – Protects against lawsuits filed by another entity (such as a manufacturer of faulty equipment) claiming the employer contributed to the injury.
- Loss of Consortium Claims – Covers legal claims by family members of an injured employee.
Employers’ Liability Insurance in Washington State
While Washington businesses must obtain workers’ compensation coverage through L&I, Employers’ Liability Insurance must be purchased separately through an insurance agent. This coverage is vital to protect against lawsuits that are not covered under the state’s workers’ compensation system.
How Employers’ Liability Differs from Employment Practices Liability Insurance (EPLI)
Many business owners confuse Employers’ Liability Insurance with Employment Practices Liability Insurance (EPLI), but they serve different purposes. EPLI protects businesses against claims related to employment practices, such as:
- Wrongful Termination
- Discrimination
- Harassment
- Retaliation
Unlike workers’ compensation and employers’ liability insurance, EPLI does not cover workplace injuries but instead focuses on legal disputes related to employee treatment.
Why Both Workers’ Compensation and Employers’ Liability Insurance Are Essential
For businesses with employees, carrying workers’ compensation insurance is required by law in Washington State. However, employers’ liability insurance is equally important, as it provides financial protection against lawsuits that could result in costly legal fees and settlements. Without employers’ liability coverage, a business could face significant financial losses if an employee (or their family) sues for damages not covered by workers’ compensation.
Contact Hood Insurance Agency Today!
While workers’ compensation insurance and employers’ liability insurance are often associated, they serve different roles in protecting businesses and employees. Workers’ compensation ensures injured employees receive medical and wage benefits, while employers’ liability protects businesses from lawsuits related to workplace injuries. In Washington State, it’s important to remember that workers’ compensation must be obtained through L&I, while employers’ liability insurance must be purchased separately through an insurance agent. Ensuring that your business has comprehensive coverage will help safeguard both your employees and financial interests. If you’re looking for the best workers’ compensation and employers’ liability insurance in Lynnwood, WA, consult with our experienced team to ensure you have the right coverage tailored to your needs. Contact us today to learn more about how we can help protect your business!