Published October 2026.
Direct Answer: Workers’ compensation Coverage A (Part One) pays statutory benefits—medical care and wage replacement set by state law—without requiring the employee to prove fault or sue. Coverage B (Part Two, employer’s liability) pays when the law allows the employee or a third party to bring a lawsuit against the employer for work-related injury, including defense costs, up to the employer’s liability limits on the policy. Contractors should read both parts on the proposal: Coverage A is the everyday comp system; Coverage B is the lawsuit layer that often surprises people after a serious job-site loss.
Every standard workers’ compensation policy in states with a private market binds Part One (Coverage A) and Part Two (Coverage B, employer’s liability) together. Certificates list one comp number, but limits and triggers differ. When your proposal says “WC 100/500/100,” that shorthand mixes statutory benefits with lawsuit limits. For classification, experience rating, and program context, see workers’ compensation insurance, coverage classification, and experience rating.
What Coverage A Pays
Coverage A is the statutory workers’ compensation benefits section. It pays what state comp law requires for a covered work injury or disease: medical treatment, wage indemnity (subject to state caps), rehabilitation where provided, and death or dependency benefits.
The comp trade is exclusive remedy in most situations: the employee receives statutory benefits through the comp process and cannot also sue the employer for negligence to recover the same economic losses. Fault is largely irrelevant. Coverage A does not use dollar limits the way liability insurance does; benefits follow statute and fee schedules. Premium ties to payroll and class codes, not to a medical limit you select on the declarations page.
Coverage A responds to claims filed with the state board or commission. The carrier or TPA pays the emergency room bill and wage replacement check. It is not the line that pays a large civil verdict to a general contractor in an action-over case. That distinction matters on jobs where subs sit inside someone else’s safety program and indemnity chain.
What Coverage B Pays
Coverage B is employer’s liability under Part Two of the workers’ compensation policy. It covers the employer’s legal liability to pay damages because of bodily injury by accident or disease sustained by employees when the employee or another party is permitted to sue and recover tort damages, or when liability is not fully satisfied by Coverage A statutory benefits. The practical question is whether exclusive remedy bars the suit or an exception applies.
Coverage B pays covered damages up to limits and typically includes defense, often inside limits. For contractors, it matters when a serious injury produces a civil complaint or an upstream party seeks indemnity after being sued.
Coverage B is not commercial general liability for injuries to non-employees. It focuses on employee injury liability and tort exceptions in the employer–employee relationship, with per-accident and disease-style limits on the same policy number as Coverage A. When one event triggers both comp and a lawsuit file, adjusters split Coverage A from Coverage B; treat employer’s liability notices like GL notices, as outlined in our claims management guide.
Standard Employer’s Liability Limits
On most voluntary-market policies, default employer’s liability limits on the declarations are three numbers—commonly 100/500/100:
- $100,000 each accident for bodily injury by accident
- $500,000 policy limit for bodily injury by disease
- $100,000 each employee for bodily injury by disease
Those limits apply to Coverage B only; they do not cap statutory medical and wage benefits under Coverage A. Limits vary by carrier and state, but this baseline appears on many contractor proposals unless limits were increased.
Carriers offer voluntary increases—often 500/500/500 or $1 million each accident. General contractors frequently require higher limits when subs sign broad indemnity flow-downs.
If Coverage B stays at 100/500/100 but your umbrella schedule requires $500,000 each accident employer’s liability as underlying, you have a tower gap. Read Part Two on the declarations, insuring agreements, conditions, and exclusions the way you read GL limits—not as boilerplate.
When an Employee Can Sue Anyway
Exclusive remedy is strong but not absolute. Contractors see exceptions in safety-program disputes, product-related injuries, and contract-driven indemnity chains. These are coverage patterns, not state-specific legal advice.
Dual-capacity claims. The employer is sued not only as employer but in another distinct capacity related to the injury—manufacturer of equipment the employee uses, premises owner, or equipment lessor. The worker may collect comp benefits and, in some jurisdictions, pursue tort damages against that other capacity. Where dual capacity is recognized, Coverage B is the usual funding source, subject to exclusions.
Third-party-over and action-over suits. The worker sues a third party—often the general contractor or owner—and that party seeks indemnity from the employer under contract or negligence theories. Broad subcontract indemnity can convert a comp-only employee injury into civil exposure on Coverage B. GC certificate demands for higher Part Two limits track social inflation and large verdict pressure on construction liability even though Coverage A has no dollar cap.
Intentional acts and gross negligence carve-outs. Many states allow suits or deny comp for intentional harm, deliberate attacks, or conduct outside the comp bargain. Willful misconduct or “serious and willful” statutes may preserve a tort remedy or enhanced damages. Mandatory endorsements and exclusions determine whether Coverage B responds. Allegations of deliberate safety violations appear in complaints early—do not assume comp ends the discussion.
Longshore, harbor, and federal exposures use separate parts (USL&H, federal comp) with their own liability sections; confirm declarations if you work near water or on federal sites.
The Monopolistic-State Wrinkle
North Dakota, Ohio, Washington, and Wyoming run monopolistic or largely state-controlled workers’ compensation funds for most employers. You often buy statutory benefits from the state fund or bureau rather than a private Part One policy. The voluntary-market combined WC form is not written the same way there.
Employer’s liability does not automatically attach to the state fund like Part Two on a standard WC policy elsewhere. Contractors in those states often need a stop-gap employer’s liability endorsement on general liability or a separate stop-gap policy to recreate Coverage B–type protection for permitted lawsuits. Without it, you may have benefits for the employee but no dedicated employer liability limit for action-over or dual-capacity exposure—visible when a certificate asks for “WC and EL” and an Ohio state fund ID alone does not satisfy EL.
Multi-state contractors should align state fund coverage, stop-gap endorsements, and voluntary-market policies so no territory has benefits without a Part Two–style limit. Mixed-state design belongs in commercial insurance program design conversations with your broker.
How Umbrella and Excess Attach Above Coverage B
Umbrella and excess policies add limits after underlying policies exhaust. Underlying employer’s liability means Part Two limits—not Coverage A statutory benefits. Schedule workers’ compensation employer’s liability on the umbrella with limits that match the comp declarations; a $500,000 underlying requirement paired with 100/500/100 on comp can break maintenance conditions.
Action-over events may implicate GL, auto, and employer’s liability together. Read umbrella and excess liability insurance, primary limits, and underlying schedules with employer’s liability listed—not only GL and auto.
What to Check on Your Proposal
Before you bind a workers’ compensation quote or renewal:
- Part One states and entities. Every state with payroll and every employing entity should be listed.
- Part Two limits. Find the three employer’s liability numbers; compare to subcontract indemnity requirements and umbrella underlying schedules.
- Increased limits endorsements. Confirm 500/500/500 or $1 million each accident endorsements are on the quote, not only in email.
- Monopolistic states. In ND, OH, WA, or WY, locate stop-gap employer’s liability and its limits.
- USL&H or federal parts. Maritime or federal jobs need the correct coverage part, not a guess on the certificate.
- State endorsements. Forms that modify Part Two or action-over coverage should match where you perform work.
- Umbrella integration. Underlying comp policy numbers and dates should match the policy carrying Part Two.
Coverage A is the statutory path most employee injuries take. Coverage B is where contracts and legal exceptions turn the same injury into a lawsuit. Knowing both keeps you from staring at a renewal proposal when someone asks why employer’s liability still shows 100/500/100—and you have no answer.
Frequently Asked Questions
What does workers’ comp Coverage A pay?
Coverage A pays statutory workers’ compensation benefits required by state law—typically medical care for work injuries, a portion of lost wages, vocational rehabilitation where applicable, and death or dependency benefits. These payments are made on a no-fault basis through the comp system; the employee generally cannot sue the employer for these same economic losses as a tort claim. Benefits and caps are set by statute and vary by state.
What does Coverage B (employer’s liability) pay?
Coverage B responds when the employer owes damages because an injured worker is allowed to sue outside the exclusive remedy of Coverage A. It pays employer liability for bodily injury by accident or disease, including defense costs within the policy limits. It does not replace Coverage A statutory benefits; it sits alongside them as Part Two of the workers’ compensation policy.
What are the standard employer’s liability limits?
Most workers’ compensation policies include employer’s liability limits of $100,000 each accident, $500,000 disease policy limit, and $100,000 disease each employee—the familiar 100/500/100 structure shown on declarations. Carriers often offer optional increases to $500,000/$500,000/$500,000 or $1 million each accident for contractors facing action-over or dual-capacity exposure. Limits vary by carrier, state, and underwriting.
When can an injured employee sue their employer despite workers’ comp?
Employees may still sue in situations the exclusive remedy rule does not bar: intentional harm or conduct some states treat as outside comp; claims where the employer has a separate legal “capacity” beyond employer (dual capacity); suits brought by a third party that then seeks contribution from the employer (third-party-over or action-over); and in monopolistic states where a stop-gap endorsement is needed because the state fund does not include employer’s liability. State law controls each exception.
What are dual-capacity and third-party-over (action-over) suits?
Dual-capacity claims arise when the employer also acts in a non-employer role—such as manufacturer of equipment the employee uses—and the worker sues in that other capacity. Third-party-over or action-over suits start when someone the employer’s work brought onto a job site (often a general contractor or project owner) is sued by the injured worker and then asserts the employer must indemnify them because of a contract or a negligence theory. Coverage B is where these liabilities often land if they are covered.
How does an umbrella policy attach above employer’s liability?
Commercial umbrella or excess liability typically sits above the employer’s liability limits of Part Two, not above statutory Coverage A benefits. The umbrella declarations and underlying schedule should list workers’ compensation employer’s liability as an underlying policy; attachment usually follows the exhaustion of Coverage B limits for covered employer liability claims. Coordination with general liability and auto matters because action-over claims may implicate multiple parts of the program.