Top 3 Recommended Policies

By: Lance Hale
Licensed Commercial Insurance Specialist
425-320-4280
Every company that hires workers in Washington carries a duty of care that goes beyond issuing paychecks. From construction sites in Seattle to boutique wineries in Walla Walla, employers must guard against workplace injuries, occupational illnesses and the financial fallout they create. Washington’s workers’ compensation system provides the first line of defense, yet claim costs often spike beyond statutory benefits. That gap is where employers liability insurance (ELI) steps in, shielding the balance sheet and protecting business continuity. The guide below breaks down the essentials — legal context, coverage specifics, real-world claim scenarios, pricing, and practical tips — so Washington employers can make informed choices and stay compliant.
Understanding Employers Liability Insurance in Washington
Employers liability insurance is commonly packaged with workers’ compensation policies, but its purpose is distinct. While the state fund or private insurer pays statutory benefits for medical expenses and lost wages, employers liability picks up costs when an employee or their family alleges negligence against the employer.
Typical lawsuits include claims of inadequate safety training, failure to maintain equipment or provide proper protective gear, and wrongful death suits filed by dependents. Washington’s workers’ compensation “exclusive remedy” rule limits direct legal action against employers, yet several exceptions allow cases to go forward, triggering the need for ELI.
Core Difference From Workers’ Compensation
Workers’ compensation is no-fault: an injured worker receives benefits regardless of who caused the accident. Employers liability, however, responds to suits that must establish employer fault, such as intentional disregard of safety standards. It covers legal defense, settlements, court judgments and related costs up to policy limits.
In Washington, the nuances of employers liability insurance become particularly relevant in industries with higher risks, such as construction and manufacturing. These sectors often face greater scrutiny regarding safety protocols and employee training programs. As a result, employers must not only ensure compliance with state regulations but also proactively implement robust safety measures to mitigate potential claims. This proactive approach not only protects employees but also serves as a critical defense in the event of a lawsuit, demonstrating the employer's commitment to workplace safety.
Moreover, the financial implications of employers liability insurance can be significant. In the event of a lawsuit, the costs associated with legal fees and potential settlements can quickly escalate, impacting a company's bottom line. Therefore, understanding the intricacies of this insurance is essential for employers. They should regularly review their coverage and consider additional endorsements or higher limits based on their specific risk exposures. Engaging with insurance professionals who specialize in workplace safety can also provide valuable insights into best practices and risk management strategies, ultimately fostering a safer work environment and reducing the likelihood of claims.

Why the General Liability Policy Leaves a Costly Gap
Washington operates a monopolistic state fund for most workers’ compensation policies, yet employers still face litigation avenues that bypass the exclusive remedy rule. One of the most notable is the “deliberate intention” exception under RCW 51.24.020. When an employer is proven to have consciously disregarded a known risk — for instance by removing machine guards to speed production — liability can extend far beyond statutory benefits. This means that employers could be held accountable for damages that far exceed what they would typically pay under workers' compensation, leading to significant financial repercussions that could jeopardize the business's future.
Another exposure arises when employees pursue third-party over-actions. Suppose a worker sues a machinery manufacturer, and that company in turn files a cross-complaint against the employer alleging improper maintenance. Employers liability insurance can step in to defend and indemnify the business. This coverage not only protects against financial loss but also ensures that businesses can allocate resources toward their core operations rather than getting entangled in costly legal battles. The complexities of such cases can be overwhelming, and having the right insurance can provide peace of mind for business owners.
Industry Risk Highlights
In 2022, the Washington State Department of Labor & Industries (L&I) recorded over 87,000 accepted workers’ compensation claims. Construction, manufacturing, and healthcare ranked among the highest in frequency and severity. Those same sectors also account for a disproportionate share of employment-related lawsuits, amplifying the need for robust ELI limits. The construction industry, for example, is particularly hazardous, with workers exposed to falls, equipment malfunctions, and other risks that can lead to serious injuries. As such, employers in this sector must be vigilant about safety protocols and the potential for litigation stemming from workplace incidents.
Moreover, the healthcare industry faces unique challenges, especially in an era where staffing shortages and increased patient loads are common. Healthcare workers are often at risk of workplace injuries due to the physical demands of their jobs, which can include lifting patients or dealing with hazardous materials. As a result, employers in this field must not only prioritize employee safety but also prepare for the possibility of lawsuits related to workplace injuries or negligence claims. With the stakes so high, having comprehensive employers liability coverage becomes not just a smart business decision, but a necessary safeguard to protect both the employees and the organization itself.
Legal Framework: State and Federal Regulations
Washington’s monopolistic system requires most employers to purchase workers’ compensation through L&I, with few exceptions for self-insured entities. The policy automatically includes employers liability coverage for claims filed within Washington’s jurisdiction. However, businesses operating across state lines or hiring remote employees located elsewhere often need a complementary private-market ELI endorsement. This additional coverage is crucial as it protects employers from lawsuits filed by employees for work-related injuries that fall outside the scope of standard workers' compensation claims. Such endorsements can also provide broader coverage for claims that may arise from negligence or other legal theories that are not covered under the state’s workers' compensation laws.
On the federal side, statutes such as the Jones Act, Longshore and Harbor Workers’ Compensation Act, and Federal Employers Liability Act (FELA) govern maritime, dock, and railroad employees. Washington companies with exposure to these categories must ensure their coverage extends to federal liabilities because state-fund policies do not. The complexity of these federal regulations often requires employers to consult with legal experts to navigate the nuances of compliance. For instance, the Jones Act specifically protects seamen, allowing them to seek damages for injuries caused by negligence, which means that employers in maritime industries must be particularly vigilant in securing appropriate coverage to mitigate potential liabilities.
Failure to secure the necessary policies can result in significant fines, stop-work orders, and personal liability for company officers. In extreme cases, criminal penalties may apply for knowingly operating without proper insurance. The repercussions extend beyond financial penalties; they can also damage a company's reputation and hinder its ability to secure future contracts. Employers should regularly review their insurance policies and coverage limits to ensure compliance with both state and federal regulations, as well as to adapt to any changes in the law or their business operations.
Contractual Obligations and Client Requirements
Large general contractors, public entities, and tech firms frequently stipulate minimum employers liability limits in their vendor agreements. A common contractual requirement is $1 million per accident/$1 million disease policy limit/$1 million disease per employee, but high-hazard projects can push the mandate to $5 million or higher. Without proof of adequate ELI, companies may be barred from bidding or face termination of existing contracts. This requirement not only serves to protect the contractor but also ensures that all parties involved in a project maintain a standard of safety and accountability. As such, companies seeking to partner with larger entities must be proactive in obtaining the necessary coverage and demonstrating compliance with these contractual obligations.
Moreover, the landscape of contractual requirements is evolving, particularly in industries that are increasingly focused on sustainability and corporate social responsibility. Companies may find themselves needing to meet additional criteria related to safety practices and employee welfare, which can include enhanced liability coverage. As part of the bidding process, potential contractors may be required to submit detailed safety records and insurance documentation, making it essential for businesses to maintain comprehensive and up-to-date records. This not only helps in securing contracts but also fosters a culture of safety and responsibility within the organization, ultimately benefiting both employees and the bottom line.
Key Policy Features and Coverage Details
Employers liability is generally written with three core limits: “each accident,” “disease policy limit,” and “disease each employee.” Standard limits begin at $100,000 per category, yet Washington brokers routinely recommend minimum $500,000 or $1 million due to rising jury awards. Policies can be structured on either an occurrence or claims-made basis, though occurrence remains the norm.
Covered damages include legal defense costs, settlements, judgment amounts, and, in some cases, punitive damages if not expressly excluded. Ancillary payments such as interest on judgments, costs taxed against the insured, and expenses incurred by the insurer to investigate or settle claims typically sit outside the limit, providing added protection.
Key Exclusions
ELI does not cover penalties from OSHA or L&I, intentional acts causing injury, or liabilities assumed via contract unless specifically endorsed. Claims related to harassment, discrimination or wrongful termination fall under employment practices liability insurance (EPLI) rather than ELI. Finally, liabilities arising under federal statutes like the Jones Act require specialized extensions.
Common Risks and Real-World Claim Examples
Abstract concepts become clearer when paired with real outcomes. The following condensed case studies underscore how employers liability insurance functions in Washington.
1. Mechanical Guard Removal – A Tacoma manufacturing plant removed safety guards to speed production. An employee’s hand was crushed, resulting in permanent disability. The worker pursued a deliberate intention suit and was awarded $2.7 million. Workers’ compensation covered medical bills and partial wage replacement, while the ELI policy paid the legal defense and judgment beyond statutory benefits.
2. Scaffold Collapse – On a Bellevue condo project, a subcontractor’s scaffold failed due to faulty assembly. Two carpenters fell three stories, sustaining head and spinal injuries. Each sued the scaffold supplier, which filed a cross-complaint against the subcontractor employer. Employers liability insurance funded $1.1 million in legal fees and settlement contributions.
Emerging Exposures
Remote work creates ergonomic injuries not easily monitored by onsite safety teams. Repetitive strain claims have increased 18% statewide since 2020. If remote employees allege that inadequate home-office guidance led to chronic injuries, employers liability — in tandem with workers’ compensation — can come into play.
How Much Does Employers Liability Insurance Cost in Washington?
Because employers liability is bundled into workers’ compensation coverage obtained through L&I, the incremental cost in Washington’s state fund is modest for in-state employees. The base rate for ELI within the fund often falls below $50 per employee annually, though it scales with payroll and hazard classification.
When businesses need out-of-state or excess limits, they must purchase “stop-gap” employers liability from private insurers. Premiums depend on several factors, including total payroll, industry class codes, claims history and selected limits. For a typical mid-sized construction firm with $5 million payroll, a $1 million stop-gap policy may range from $7,000 to $12,000 per year. Tech companies with lower manual labor exposure might pay $1,500 to $3,000 for similar limits.
Rate Influencers
Experience modification factors, safety programs, and the presence of robust return-to-work policies can reduce premiums. Conversely, a history of OSHA violations, high loss ratios or incomplete safety documentation drives costs upward. Insurers also examine subcontractor management procedures, as poorly vetted subs heighten litigation chances.

Steps to Obtain and Maintain the Right Coverage
Securing comprehensive protection is a multi-layer process rather than a one-time purchase. The checklist below summarizes best practices for Washington employers:
1. Confirm L&I Policy – Ensure all employees working inside Washington are covered under the state fund policy. Review accuracy of class codes and payroll estimates.
2. Assess Multi-State Exposure – Identify out-of-state employees, traveling executives and remote staff living elsewhere. Partner with a broker to place stop-gap or standalone ELI coverage where needed.
Policy Maintenance Tips
Conduct quarterly payroll audits to minimize end-of-year premium surprises. Update the insurer when operations expand into new states or industries, as silent exposures can invalidate coverage. Finally, document and communicate safety training, drill records and incident investigations; such evidence can be critical when defending an ELI claim.
Best Practices for Risk Management and Claim Prevention
The most cost-effective claim is the one that never happens. Proactive risk management not only reduces injuries but also strengthens a legal defense should litigation arise.
Washington L&I notes that employers investing $1 in safety programs can save up to $6 in indirect costs such as overtime, retraining and reputation damage. These savings compound when factoring in potential lawsuits and increased premiums.
Key strategies include routine hazard assessments, near-miss reporting incentives, and management walk-throughs that visibly reinforce safety culture. In high-risk sectors, implementing wearables or sensor technology can flag unsafe conditions in real time.
Return-to-Work Programs
Evidence shows that injured employees who return to modified duty within 30 days are 50% less likely to file negligence suits. Structured return-to-work plans demonstrating employer commitment to recovery reduce adversarial dynamics and litigation likelihood.
Frequently Asked Questions
Is employers liability insurance mandatory in Washington?
It is embedded within state-fund workers’ compensation for in-state workers, effectively making it mandatory. Out-of-state or excess needs require separate policies but are strongly recommended to avoid uninsured liability.
What limits should a small business choose?
For light-hazard industries, $500,000 per accident/disease is a practical baseline, though many contracts call for $1 million. High-hazard firms should consider $2 million or higher, factoring in umbrella policies for additional capacity.
Does an umbrella policy replace employers liability?
An umbrella extends limits above the ELI policy but does not replace it. The underlying employers liability policy must be in force for the umbrella to drop down.
Coverage for Volunteers and Interns
Volunteers are generally excluded unless specifically endorsed. Paid interns, however, are treated as employees under Washington law and require both workers’ compensation and employers liability inclusion.
Final Thoughts
Washington’s dynamic economy — from aerospace and software to agriculture and maritime trades — thrives on a healthy, protected workforce. Employers liability insurance forms a critical shield against lawsuits that could derail growth, drain cash flow or, in severe cases, shutter operations. Understanding state and federal nuances, purchasing adequate limits, and embedding strong safety cultures allow businesses to focus on innovation rather than litigation. By following the guidance outlined above, Washington employers position themselves to meet both legal obligations and moral responsibilities, ensuring that when accidents occur, everyone affected has a path to recovery without putting the enterprise at existential risk.