Difference Between Workers Compensation and Employer Liability Insurance

Every business in the UAE needs adequate insurance coverage to protect both the company and its employees. If you run a business, you’ve probably encountered a discussion on employers liability insurance vs workers compensation insurance. While both are essential, they serve different purposes and cover different aspects of workplace risks. Here, we’ve highlighted the key differences between these to help you understand which coverage is right for your business.

What is Workers' Compensation Insurance?

Workers' compensation insurance, also known as workmen's compensation (WC) insurance, is mandatory coverage in the UAE. It provides financial and medical benefits to employees in case of work-related injury, illness, or death during the course of employment.

It enables a business to cover medical expenses and wage loss because of work-related accidental injuries, disabilities, or diseases that employees incur. The main inclusions are –

Disability or death from a work-related injury
Personal total disability
Permanent partial disability
Temporary total disability
Medical expenses
Repatriation expenses
24-hour personal accident cover (in workplace)

What is Employers' Liability Insurance?

Employers' liability insurance is also a crucial business insurance in the UAE. It financially protects the employer from lawsuits arising from injuries and deaths in the workplace related to employment. Typically, it covers legal costs, compensation, attorney fees, and other related expenses.

Let’s understand this policy with an example. As discussed above, WC insurance compensates employees in the event of injury, illness, or death while working. If the employee ( or their family) feels that the compensation is insufficient, they can sue the employer. This is where the employer's liability insurance comes into play, safeguarding the employer by covering legal costs and liabilities.

Furthermore, you can choose the coverage amount under this policy based on your business risk. Typically, it provides coverage of up to AED 1,000,000 for each incident, with a maximum of AED 200,000 per person per accident. But employers can also choose higher limits based on their requirements.

Employers Liability vs. Workers Compensation Insurance

Many people often confuse workers’ compensation with employers’ liability insurance, using the terms interchangeably. However, they serve different purposes. To help you understand the distinction more clearly, we’ve outlined the key differences between workers' compensation and employers liability insurance:

Parameters	Workers Compensation Insurance	Employers Liability Insurance
Meaning	It benefits both the employee and the employer– provides compensation to the employees in case of injury, illness and death during work and helps employers to stay compliant with the UAE law.	It offers financial protection to employers against lawsuits arising from employees in case of insufficient compensation.
Mandatory	Yes	No
Coverage	Partial and permanent disability Medical expenses Loss of wages Occupational death Repatriation expenses, and more	Legal cost Attorney fees Settlement Damage compensation, and so on

Key Takeaways

Understanding the difference between workers compensation and employers liability insurance is essential, as both play a vital role in protecting your business and employees. While they serve different purposes, together they help safeguard your business from financial strain and ensure that employees receive fair compensation in the event of work-related injuries or illnesses. By having a clear understanding of these insurance plans, you can choose the right coverage to shield your business from liabilities and maintain financial stability.

Frequently Asked Questions

Employers' liability and workers' compensation insurance are essential for protecting a business financially. Mostly, employers' liability comes under WC as an extension, but it can also be purchased as a standalone policy. So, combining both coverages will work best for your business.

No, employers’ liability insurance protects employers against claims made by employees, while workers’ compensation provides employees with compensation for injuries, illnesses, or death that occur during working hours.

Yes, workers' compensation insurance is mandatory by law in the UAE. Without this insurance, employers can face severe penalties and fines.

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Workmen Compensation As Per UAE Labour Law