Employer liability insurance is generally present in workers compensation policies. This form of liability insurance protects the employers against employee claims for accidents resulting from alleged employer negligence. Normally, employees do have the right to statutory benefits. Yet, there are instances when employees can file a lawsuit against their employers. An employer who is overtly negligent can be sued by his employees. Added to that are cases where the employer had the dual responsibility of the employer and the manufacturer. If one of his products is to cause harm to his employee, then the latter can sue under what is called the doctrine of dual capacity.

Lately, employer's liability insurance has become a lot more important, resulting in sharp rises in premium costs. One of the major issues over the years has been cancer claims from employees who are working with asbestos on a day-to-day basis and also in environments that have smokers. Such instances have spawned new policies to guard against any liability that could be put on the employer by the employee from injuries the latter could sustain during the course of his employment.

In several states, insurers are not allowed to include conditions in their policies such as that look at imposing unreasonable conditions precedent to liability. Also, the insured are required to take precautions or comply with prevailing regulations. In countries where such type of insurance is not obligatory, it can be disastrous for smaller companies, who are liable to go bankrupt when faced with such claims.