Workers’ Compensation Employers Liability Limits

A workers’ compensation policy has two related but different parts. Part One provides workers’ compensation insurance under the applicable law. Part Two, employers liability, addresses certain covered employer-liability claims arising from employee injury that are not simply benefit claims under Part One. The declarations show separate employers-liability limits, often in a three-number pattern. Understanding those numbers prevents a common exam mistake: treating them as caps on all workers’ compensation benefits.

An employers-liability schedule commonly distinguishes bodily injury by accident, bodily injury by disease for each employee, and bodily injury by disease policy limit. The first is often called the each-accident limit. The second caps covered disease liability for one employee. The third is an aggregate cap for covered disease liability across employees during the policy period. Actual limits appear in the policy and can be raised by an increased-limits option or endorsement.

Part One benefits are different from Part Two limits

Part One pays benefits prescribed by applicable workers’ compensation law for covered employees and injuries, subject to the policy and law. Medical, income, and death benefits are determined under statutory rules. Employers-liability limits do not ordinarily set the dollar ceiling for those statutory benefits. Part Two limits apply to covered claims alleging employer liability under the policy’s insuring agreement and are subject to its exclusions, conditions, and defense provisions.

A worker’s medical bills can exceed the employers-liability limit without making Part One benefits subject to that limit. Conversely, a lawsuit may seek damages beyond the benefits available under workers’ compensation. The policy may provide Part Two coverage for certain defined claims, subject to the listed limit. The two parts share a policy relationship but have different triggers and payment frameworks.

The three common limit labels

Bodily Injury by Accident—Each Accident applies to covered bodily injury arising out of one accident. If several employees are injured in a single event, such as an explosion or vehicle crash at work, the each-accident limit can cap the insurer’s total covered liability for that event, subject to the policy’s terms. It is not a separate limit for every injured person.

Bodily Injury by Disease—Each Employee applies to covered disease liability for an individual employee. A disease claim can develop gradually after repeated exposure, making the employee-specific limit distinct from an accident limit. The policy’s disease definition, exposure period, policy trigger, and other conditions determine which employees and policy periods are involved.

Bodily Injury by Disease—Policy Limit is an aggregate ceiling for covered disease liability across employees. Even if each employee’s claim is within the per-employee limit, total covered disease claims can reach the policy aggregate. A company with a workplace exposure affecting many employees must understand both the per-person and total limits.

How to read a three-number limit

A declarations page might show $100,000 each accident / $100,000 each employee for disease / $500,000 disease policy limit. These amounts are a familiar example of standard limits in older Texas manual materials, not a statutory maximum or a promise that every current policy uses those values. Higher limits are often available. The actual policy’s Item 3.B and endorsements control, and the amounts should be reviewed against contract requirements and the employer’s risk.

A project contract may require employers-liability limits of $1 million. That is a contractual requirement, not necessarily a Texas statute’s standard minimum. The employer may need increased limits on Part Two, an umbrella or excess policy that follows the underlying workers’ compensation policy, or another arrangement accepted by the contract. A certificate showing a higher limit is not sufficient unless the actual issued policy supports it.

Do not confuse employers-liability limits with the commercial general liability per-occurrence and aggregate limits. They appear in a different policy part and respond to different claims. Nor are they the same as the workers’ compensation insurance limits under Part One, which are governed by the applicable statute and policy.

Examples

Accident example: A machine failure injures three employees in one event. Part One benefit claims are evaluated under workers’ compensation law. If an employee also brings a covered employer-liability claim, the bodily-injury-by-accident limit may apply to the covered liability arising from that accident. The number of injured workers does not automatically create three separate each-accident limits.

Disease example: Several employees allege occupational illness from repeated exposure over time. The adjuster must identify each employee’s covered injury, when exposure and manifestation occurred, which policy period applies, and whether the claim falls within Part Two. The per-employee disease limit applies to each covered individual, while the disease policy limit can cap total covered liability across all employees.

Contract example: A general contractor requests $1 million employers-liability limits and a waiver of subrogation. The insured has $100,000/$100,000/$500,000 on its declarations and a waiver endorsement. The waiver does not increase the limits. The contractor must obtain the required increased limits or acceptable excess arrangement and confirm the waiver is issued for the right entity and operations.

When increased limits are needed

Employers often select increased limits because a contract requires them, because a catastrophic workplace event could create multiple claims, or because an employer wants greater protection for covered Part Two liabilities. An increased limit changes the maximum insurer payment under Part Two for covered claims. It does not broaden the insuring agreement or remove exclusions. A claim outside the policy’s coverage is not made covered merely by raising the limit.

Ask whether the increased limits apply uniformly to accident and disease or whether the schedule changes only some portions. Confirm that the named insured, subsidiary, state, and employee group are covered. If the policy includes voluntary compensation or special state endorsements, there may be separate limit rules. The employer should read the endorsement and current declarations rather than assume the usual three-number pattern is unchanged.

An umbrella policy may provide excess limits over employers liability, but only if its schedule includes the coverage and its attachment provisions are satisfied. Some umbrella forms exclude or restrict employee injury and employers-liability exposures. Compare underlying limits, retained limits, follow-form language, aggregate treatment, and required underlying policies. A certificate or contract clause cannot make a nonresponsive umbrella follow the workers’ compensation policy.

Texas-specific considerations

TDI’s workers’ compensation materials state that the Texas workers’ compensation policy language and information page are prescribed, and the current NCCI manuals are adopted with Texas exceptions. TDI’s rate and policy pages link to current manuals and filings. Some older Texas basic manuals display historical standard employers-liability limits. Because limits and rules can be revised, check current policy information and the insurer’s issued forms before relying on a specific dollar figure.

Texas employers can choose whether to subscribe in many private-employer situations, but a non-subscriber’s employee suit is not an employers-liability claim under a policy the employer does not have. Non-subscriber status has separate notice and litigation consequences. Employers-liability limits do not make a non-subscriber safe from suit, and buying an unrelated liability policy does not necessarily recreate subscriber protections.

Common policy exclusions and limit traps

Part Two includes exclusions that can affect employee injury suits, including certain obligations imposed by workers’ compensation, intentional injury, employment practices, contractual liability, and other categories depending on wording. The separate employers-liability-exclusions article reviews those issues in more detail. For a limit question, first determine that the claim falls within Part Two; only then apply the applicable limit structure.

• Using the accident limit for a disease claim or vice versa.
• Treating the disease policy limit as a separate amount for each employee.
• Adding Part One benefits to the Part Two limit as though one total cap applies.
• Assuming the common $100,000/$100,000/$500,000 example is a statutory minimum or applies to every issued policy.
• Assuming contract-required $1 million limits are automatically included.
• Assuming a waiver of subrogation or certificate increases employers-liability limits.
• Assuming an umbrella covers Part Two without checking the schedule and exclusions.

How to check the policy

Find the workers’ compensation and employers-liability information page and read Item 3.B. Compare each amount with the insurance exhibit in the contract. Check for an increased-limits endorsement, voluntary-compensation group limits, state schedule, and umbrella or excess coverage. Confirm the named insured and all legal entities. Ask the carrier to explain whether disease limits are per employee and aggregate, and whether the umbrella follows the Part Two coverage.

If a certificate has a limit different from the declarations, ask for the policy or endorsement that supports the higher number. TDI’s certificate guidance makes clear that a certificate cannot amend the underlying policy. Correct a certificate that overstates coverage; do not treat the certificate as the source of an increased limit.

Disease limits and contract requirements

### Disease-limit illustration Assume a policy displays $100,000 for disease per employee and $500,000 for the disease policy limit. If a covered disease claim for one worker is evaluated at $140,000, the per-employee limit may cap the covered Part Two payment at $100,000, subject to the policy and other terms. If six employees each have a covered $100,000 claim, the $500,000 disease aggregate could become the controlling cap even though each individual claim is within the per-person amount. This illustration shows why both disease figures matter; it does not predict the outcome of a real claim or replace the policy language. The accident limit operates differently. If one accident injures several employees, the policy’s each-accident limit applies to covered Part Two liability arising from that event. It is not multiplied by the number of plaintiffs. A separate incident on another day may be a different occurrence under the contract, but how claims are grouped can depend on the facts and policy wording. The insurer evaluates what constitutes an accident and the relationship among alleged injuries; the insured should not decide the number of limits by counting claimants alone. ### Limits should match the employer’s contracts and risk Large construction owners, public agencies, manufacturers, and energy companies may require limits higher than the basic policy schedule. They may also require a waiver of recovery, alternate-employer wording, or evidence that an umbrella follows employers liability. The insured should compare the requested limits against Item 3.B and ask whether the requirement is per accident, per employee, and aggregate. A requirement that says simply “$1 million employers liability” may need clarification about the intended limit structure. Increasing Part Two limits does not raise Part One statutory benefits and does not change the employer’s subscriber status. Likewise, a contract asking for high limits cannot force the insurer to provide them without an issued policy change. The insured should secure approved changes before beginning the contract work and keep the endorsement with the certificate and contract file.

When the certificate and contract use different terms, resolve the wording before work starts and request written clarification from the contracting party and insurer.

Review limits annually because exposures, contracts, and available options change.

The employer should also keep written confirmation of any limit increase and verify that the change applies to the intended policy period.

Exam takeaway

Part Two employers-liability limits commonly separate each accident from disease each employee and disease policy aggregate. They cap covered employer-liability claims, not all statutory benefits under Part One. Read the actual information page, policy, and endorsements. Standard examples are not legal caps; increased limits may be available, and contractual requirements are separate from statutory requirements.

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Practice workers’ compensation limit questions in the Texas Property and Casualty exam prep course.