| Question from a Big I NY member: Hi Tim. Work Comp question for you. How come some policies have different limits shown than others? Work comp is unlimited isn’t it? I never really had a good answer on this issue.
Answer: By “limits,” I assume you mean the Employers Liability Limits shown in Item 3.B. in the Declarations. It is true that, for most employments, Employers Liability Insurance is unlimited in New York. The NY WC manual states that endorsement WC 31 03 08, New York Limit of Liability Endorsement, must be attached to all policies that list New York under Item 3.A. in the Declarations. It applies only to Part Two, Employers Liability Insurance, and states: "We may not limit our liability to pay damages for which we become legally liable to pay because of bodily injury to your employees if the bodily injury arises out of and in the course of employment that is subject to and is compensable under the Workers' Compensation Law of New York."
Therefore, if an injured employee is eligible for New York Workers’ Comp benefits, Employers Liability Insurance coverage is unlimited. For example, suppose a construction worker is injured using a power tool and collects WC benefits. The worker is prohibited by law from suing his employer, but the manufacturer of the tool is fair game. He sues the manufacturer for allegedly selling an unreasonably dangerous tool. The manufacturer countersues the worker’s employer for allegedly failing to train him on how to use it properly. The Employers Liability Insurance coverage for this lawsuit against the employer is unlimited because of this endorsement.
Another example: A landlord owns a few one-family houses and hires someone to clear away dead grass and leaves from one of the yards during the spring. While doing the job, this person somehow gets hurt (gets a cut or something.) A casual laborer doing chores around a dwelling is not eligible for NY WC benefits. If he sues the employer, the limits shown in Item 3.B. in the Declarations would apply to that lawsuit because the injury arose out of and in the course of employment that is not is subject to and compensable under NY WC law. In this scenario, the limits shown in the Declarations become pretty important; that’s one reason why you might see higher limits.
Another scenario would be if an employer has operations in multiple states, and an employee from another state gets hurt while temporarily in New York (think a claim adjuster from Virginia sent to New York to handle claims after a hurricane.) Most states extend eligibility for WC benefits to employees temporarily working in another state. In that case, again the injury is not compensable under NY WC law, so the limits to Employers Liability Coverage would apply. In addition, if a single policy lists New York and other states under Item 3.A., the EL limits will apply to an injury in one of those other states.
Lastly, it seems to be pretty common for some project owners to require high EL limits in the insurance requirements, probably because they’re ignorant of the way EL coverage works in New York.
These are the reasons I can think of why the EL limits might vary from one policy to another. If an employer has operations and employees only in New York and all of the employments are covered by the NY WC law, I agree that the EL limits are meaningless.
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