When you purchase workers compensation insurance you may notice that there are limits on the policy referred to as employer’s liability limits. While workers compensation was created to alleviate the amount of litigation between employee and employee by providing quasi-automatic coverage for the medical costs of employees injured on the job; employers liability limits are meant to provide coverage when an employee opts out of the workers compensation system because they believe the employer engaged in gross negligence and caused their injury. The lowest amount of these limits offered on a standard workers compensation policy are $100,000/$100,000/$500,000 (per occurrence, per employee, per policy).
Higher limits may be recommended in industries where the severity of loss is higher and/or where there is high turnover as those factors increase the likelihood that use of the employer’s liability limits by an employee.