Workers' Comp vs Employer's Liability: The Two Halves of a Sub's Policy
On a sub's certificate, workers' comp and employer's liability share one row, and most people read only the first half. They do different jobs. Workers' comp pays the injured worker; employer's liability answers the lawsuits, including the one that can land on you as the GC. This guide covers the difference, why it matters to you, the three limits on the certificate, the states where subs need stop-gap coverage, and what to require.
Workers' compensation and employer's liability are two parts of the same policy. Workers' comp pays the benefits state law requires to an employee hurt at work, regardless of fault. Employer's liability covers lawsuits over the injury that workers' comp doesn't answer, such as a family member's claim or a claim that comes back to the employer through a general contractor the worker sued. Require both from subs, with employer's liability limits for each accident, disease per employee and disease policy limit, often $500,000 or $1M each. In North Dakota, Ohio, Washington and Wyoming, employer's liability comes separately, as stop-gap coverage.
In this guide
Two parts, one policy
A standard workers' compensation policy is written in parts. The first two are the ones that matter here:
| Part One: workers' compensation | Part Two: employer's liability | |
|---|---|---|
| What it pays | Medical bills, lost wages and other benefits for an injured employee | Damages and defense when someone sues over an employee's injury |
| Who decides how much | State law sets the benefits; no limit is printed | The policy, up to the three limits on the certificate |
| Fault | Paid regardless of fault | Answers claims that turn on fault |
| Typical claims | Every on-the-job injury | A spouse's loss of consortium, a claim through a third party such as the GC, an injury the state's comp law doesn't reach |
Workers' comp is a trade: in most states the injured worker gets benefits without proving fault, and in return usually can't sue their own employer. Employer's liability exists for the lawsuits that get through anyway.
Why employer's liability matters to the GC
The workers' comp trade protects the sub, the worker's employer. It usually doesn't protect you. A sub's worker hurt on your site collects workers' comp from the sub's policy, and can then often sue you as the contractor in charge of the site. It's called a third-party-over claim, and it runs like this:
The worker sues you
Their own employer is protected by workers' comp, so the lawsuit names the GC, the owner or another trade.
You bring the sub back in
Under the subcontract's indemnity, and as an additional insured on the sub's general liability, you look to the sub and its insurers to pay.
The sub's policies answer it
Depending on how the claim reaches the sub, its employer's liability or its general liability's contractual liability coverage responds. With low limits, or none, the rest stays with you.
How these claims work, and how far an indemnity can reach, differs a lot from state to state; your attorney can tell you about yours. Two things hold almost everywhere: the sub's employer's liability limits are part of what stands between that lawsuit and your own policy, and an umbrella sits over employer's liability, not over the comp benefits, so a sub's umbrella only helps here if employer's liability is listed beneath it.
The other reason a GC cares about the whole row is cost. A sub with no workers' comp at all can put its payroll on your workers' comp audit, and in many states makes you responsible for its injured workers. See what if a subcontractor doesn't have insurance.
The three limits on the certificate
On the ACORD 25, the row is labelled Workers Compensation and Employers' Liability. A PER STATUTE box stands for the workers' comp half, since its benefits have no limit to print. The employer's liability half carries three limits:
| Limit | What it caps | Standard minimum | Often required |
|---|---|---|---|
| E.L. each accident | All claims from one accident, however many workers are hurt | $100,000 | $500,000 to $1M |
| E.L. disease, each employee | Claims for one employee's work-related illness | $100,000 | $500,000 to $1M |
| E.L. disease, policy limit | All disease claims in the policy year | $500,000 | $500,000 to $1M |
The standard minimums are what many policies carry unless someone asks for more. Umbrella policies often require $500,000 or $1M of employer's liability underneath them, so a sub with an umbrella and $100,000 employer's liability may have a hole in between. The row also has a box asking whether any proprietor, partner, officer or member is excluded: if the owner who works on your site is excluded, the policy doesn't cover them.
Stop-gap coverage in monopolistic states
In four monopolistic states, North Dakota, Ohio, Washington and Wyoming, workers' comp comes only from the state fund, not from private insurers. The state fund pays the benefits but doesn't include employer's liability. Subs there buy it separately as stop-gap coverage, usually as an endorsement on their general liability policy.
So for a sub working in those states, the certificate may show no workers' comp row at all, and the employer's liability you require has to be found elsewhere: on the general liability row or its endorsements. Ask for the stop-gap endorsement, and check the state fund's own proof of coverage. The Washington guide covers how that works there.
Texas is a different exception: workers' comp is optional for most private employers, and a sub that opts out (a non-subscriber) has neither half. The Texas guide covers what to require instead.
What to require from subs
- Workers' comp at statutory limits in every state the sub works in for you, or the state's exemption paperwork for a sub who genuinely has no employees.
- Employer's liability limits on all three lines, at least what your prime contract and any umbrella require; $500,000 or $1M each is common.
- Stop-gap coverage for work in North Dakota, Ohio, Washington or Wyoming.
- A waiver of subrogation on the workers' comp policy, so the sub's comp insurer can't come after you once it has paid. See waiver of subrogation.
- Employer's liability listed under the sub's umbrella, where you require one.
Workers' comp often renews on a different date from the sub's general liability, so check its row on its own. The full set of limits is in subcontractor insurance requirements.
How TrackMyVendor automates this
- The workers' comp row is read: the PER STATUTE box, all three employer's liability limits, the policy number and dates.
- Set a minimum for each employer's liability limit, and a sub below it, or with the row missing or lapsed, shows as Non-Compliant.
- Workers' comp is tracked on its own dates, so a lapse shows even when general liability is current.
We don't read the excluded-officer box, and we don't check a state fund's records. Stop-gap coverage on a general liability endorsement isn't read as employer's liability; check it by hand.
See how coverage requirements workBoth halves of the row, checked
Subs upload their certificates through one link — no account, no portal. Every coverage row is read, checked against your minimums and tracked on its own dates. Your first 25 contractors are free.
Frequently asked questions
What is the difference between workers' comp and employer's liability?
Why does a general contractor care about a sub's employer's liability?
What are typical employer's liability limits?
What is stop-gap coverage?
Does a sole proprietor need employer's liability?
This guide explains how workers' compensation and employer's liability commonly work for subcontractors. It isn't insurance or legal advice: benefits, exemptions and who can be sued are set by each state's law, and the policy and your contract govern. Ask your broker and attorney about your own requirements.
Insurance on a sub’s certificate
What to require from every sub, one term at a time.
Subcontractor insurance requirements: start here → Coverage, minimums and endorsements to require from subs, with every term below in one table