Employers Liability Coverage is Unlimited in New York, Except When It's Not

Question from an IIABNY member: When a certificate lists employers liability at :

• 100,000 each accident
• 500,000 policy limit
• 100,000 each employee

I always tell insured that in New York Employers liability is unlimited per the statute. Do you have something that proves this?

Answer: This is actually a little complicated because there isn’t a statute that mandates this. It’s more of a longstanding tradition. Also, the EL limits on the dec page may actually apply in certain circumstances. 

There is a 1988 New York Insurance Department advisory legal opinion on this topic. The last opinion the department issued on this was in 1990, and I think the 1988 opinion provides a better explanation. The attorney wrote in part: 

The workers' compensation carrier must "pay all sums" that the insured employer is legally obligated to pay third parties with respect to an employee's injuries which arose out of and in the course of employment, provided that, both the insured employer and the employee are subject to the New York State Workers' Compensation Law. [EMPHASIS ADDED]

The workers' compensation carrier may not impose any limit of liability for compensable injuries. The unlimited liability language of the New York Workers' Compensation Policy has been in effect for more than 40 years. The New York State Department of Insurance has never approved a workers' compensation policy form that would impose a limit on a carrier's liability for a compensable injury which includes the employer's liability. It is interesting to note that, the unlimited coverage for liability contained within Coverage B is a continuation of the coverage prevalent at the time the standard compensation policy was revised in New York in 1954. The concept of unlimited liability coverage originated in the insurance industry and was accepted by the Insurance Department when workers' compensation policy forms were submitted to the Superintendent of Insurance for approval.

Therefore, EL coverage is unlimited with regard to injuries and employments that are subject to the New York Workers’ Compensation Law. For example, a worker is in a scissor lift installing overhead piping when the lift collapses. He collects WC benefits but also sues the lift’s manufacturer, who in turn sues the employer, alleging improper use or maintenance. The employer’s EL coverage is unlimited for this loss because the injury and employment are compensable under the New YorkWC law.

In contrast, a worker borrows a power saw without permission from his employer because the motor burned out on his own saw. While at home on a weekend, he amputates a finger when the guard on the saw falls off. He sues the saw’s manufacturer, who sues the employer, again alleging faulty maintenance. Because this injury is probably not compensable under the New York WC law, the EL coverage is subject to the limits shown on the dec page.

Another example: Recently, a public school teacher near here got burned when his science experiment in the classroom went wrong. Put him in private school. If he sued the manufacturers of the equipment and supplies used in the experiment, and those entities in turn sued the private school, the EL limits on the school's WC policy would apply, because “people engaged in a teaching capacity in or for a nonprofit…educational institution” are not covered by the NY WC law while “performing teaching duties.” 

Leave a Comment

Comments

[Bob]

Tim,
It is possible you are quite smart, although I suspect that is still arguable. But that is not related to this. I think this good information.

Thanks

[Rochelle Hollander]

Brilliant. Great info.

[Lucy Walker]

I have my own business in the UK and use http://www.easyemployersliabilityinsurance.co.uk/ to get employers liability cover but i am looking to relocate from the UK across to the USA but i just don't understand the way Employers Liability etc are done out there!

[Tim Dodge]

Thanks, Bob! :) Lucy, in a nutshell, Employers Liability here covers an employer's legal liability for injuries to employees when those injuries are not compensable under state Workers' Compensation laws.

[Allan Kenan]

The examples cited here make perfect instances for analysis. Readers will certainly have a clear concept and grasp of the NY WC law. Typically, work compensation claims function on a case by case basis, as the culprit of an occupational injury shall be traced to its very roots.

[syed ahmad]

Over the weekend my car was broken into. Back window was shattered and my purse was stolen. So, basically, my life was stolen.
I need to make my Insurance will u suggest me a reputed insurance company with good insurance plans....