Difference Between Employers Liability Insurance (ELI) and Workers Compensation Insurance (WCI)

Employers Liability Insurance (ELI) and Workers Compensation Insurance (WCI) are two important insurance policies to protect the interests of both employees and employers. However, there are certain differences between the two. Because of these differences, this can lead to unlawful lawsuits and thus to concern for the parties involved. The differences between ELI and WCI relate to where they apply and what they cover. We will briefly discuss them here.

Where they apply

Employer liability insurance

As an employer in the Netherlands, you are obliged to take out employer’s liability insurance. Not buying is punished by law. In certain situations, your employees may feel that you are liable for any work-related illness/injury they may sustain and will sue for it. If it really is, there may be costs such as hospitalization, financial compensation and the like. ELI helps you in such circumstances.

While it is mandatory for you as an employer to have ELI, your employees must prove that the work-related injury/illness resulted from your negligence. Imagine you own a lumber yard. While on the job, your workers must have the necessary equipment, training, and skills to operate them. If you hire them without educating the safety standards, providing the training and checking the condition, and they are injured, it will amount to your negligence under the rules set out in the Employers’ Liability Insurance Act and will employees probably feel appropriate to sue you because you are liable.

Workers Compensation Insurance

On the other hand, workers compensation insurance is a cover for the welfare of the workers. It depends on the circumstances that determine the relationship between employer and employee. So if you are more concerned about employee health and safety, you should get this insurance. It doesn’t matter if your fault or the fault of your employees caused illness, accident or death, this insurance comes to your rescue.


Employer liability insurance

As an employer, you must go to court if the affected employee sues you. You have to pay financial compensation and bear the hospitalization and medicines. ELI covers all these costs.

Similarly, for employees, ELI covers permanent and temporary disability, injury and wrongful death at work. It also covers litigation costs.

Workers Compensation Insurance

To employers, WCI is a Good Samaritan. In most cases, it ensures that your employees do not resort to litigation. However, in such an unfortunate case, WCI will cover the costs due to lawsuits. It covers the financial costs to be paid to the affected employee for work-related injury, illness or even death.

Employees injured in the workplace, under WCI, are guaranteed compensation from the employer to cover medical and hospital expenses and a specified portion of wages. In most cases it is two thirds or more. WCI covers the costs of litigation by the employee. In general, WCI manages the situation and ensures that litigation by employees is avoided.

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WCI reimburses compensation (wages) in the event of temporary disability for the period of absence. If the person has permanent disability and is not suitable for work in the current occupation, WCI will cover the costs of vocational training and rehabilitation and the costs of looking for a job, if they choose.

While both ELI and WCI are intended to protect the interests of employees and employers, there are differences in how they apply. You need to understand them and buy a cover based on your company’s need.