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Which policy covers what, to what extent, which policies are required and which are helpful but not legally necessary, and what exclusions apply are sometimes difficult to determine.
This article will examine employers liability exclusion, helping clarify which part of which policy covers which issue.
First, a word about the typical state fund policy is in order.
Generally, there are two parts.
The first is the workers' compensation coverage.
This is known as Part One, and is most commonly used and understood in the business world.
Part Two of the policy provides employers' liability insurance.
This is the side that is often under-examined.
Part One of most state fund policies provides compensation benefits to employees for work-related injuries and illnesses, unless the employee is a household or domestic worker, a casual employee, a family member, or a corporate officer if that offer has excluded him- or herself from the policy.
For some states, the size of the company and/or how many employees they have also makes a difference.
Workers' compensation coverage is state-mandated.
However, employers' liability insurance is not.
Thus, there is a lot more leeway in the scope of the coverage provided, and in the employers liability exclusion which can apply.
Since each state interprets the employers liability exclusion and benefits, it is important that the language of the policy should be as unambiguous as possible.
Part Two covers bodily injury by accident or by disease.
Emotional or mental distress without bodily manifestations can therefore be an employers liability exclusion.
What is another example of an employers liability exclusion? One is that independent contractors or others who are not employees of the policyholder are not covered.
Most employers liability policies are occurrence policies, rather than claims made.
This means that there is an employers liability exclusion for any injury that occurs outside of the time of the policy period.
Does sexual harassment count as an employers liability exclusion? This is a complex question.
Most employer liability policies explicitly exclude claims made due to sexual harassment, coercion, criticism, demotion evaluation, reassignment, discipline, deformation, harassment, humiliation, discrimination, and so on.
However, in 1998 the New Jersey Supreme Court decided in Schmidt v.
Smith that claims of sexual harassment are covered under the employers' liability insurance Part Two, which this article has been discussing.
According to the court, the employers' liability exclusion in the policy dealing with sexual harassment violated the public policy underlying workers' compensation and was, therefore, void.
Each state makes its own policies regarding the employers liability exclusion.
It is important to completely understand your employers liability policy.
Of course, the best course is to have as little risk as possible that any of these charges would be made, by having policies and procedures which clearly safeguard employee rights.
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