Employer Liability Calculator

• Expected claims: employees × (incident rate ÷ 100)
• Controls adjustment: risk multiplied by (1.20 − 0.40×score)
• Risk trend factor: industry risk × controls adjustment × (1 + inflation)
• Direct loss: claims × severity used × risk trend factor
• Legal/admin: direct loss × legal factor
• Covered layer: min(severity − deductible, per-claim limit)
• Coinsurance: covered layer × coinsurance fraction
• Aggregate cap: insurer payout capped at annual aggregate limit
• Out-of-pocket: deductible + coinsurance + excess + gaps + legal share + aggregate excess
• Premium: insurer total × (1 + expense load) × (1 + premium tax)
• PV totals: year cost ÷ (1 + discount rate)^(year−1)

1. Enter headcount and a realistic incident rate from your history.
2. Choose average severity or a conservative multiplier model.
3. Set industry risk and a controls score to reflect prevention.
4. Configure deductible, per-claim limit, aggregate, and umbrella options.
5. Add coinsurance if your program shares covered losses.
6. Tune legal/admin share and coverage gaps to match contracts.
7. Set horizon and trends to plan budgets and PV totals.
8. Calculate, then save scenarios and export CSV or PDF.

Professional Article

Exposure Inputs and Claim Frequency

Start with headcount and an incident rate per 100 employees to approximate expected claim volume. Multiply employees by the rate divided by 100 to estimate annual claim count. Use internal logs, OSHA-style summaries, or HR case registers for calibration. In rapidly changing environments, adjust frequency trend to reflect improving training or increased turnover. Compare costs per employee and per $100k payroll for benchmarks across busy seasons.

Severity Modeling and Trend Assumptions

Average claim cost drives the severity baseline, then the model applies trend assumptions. Choose average mode for typical budgeting, or select the conservative multiplier to stress higher-percentile outcomes. Inflation and wage growth influence projected severity across the horizon, reflecting medical, legal, and compensation pressures. If your data is volatile, use a shorter horizon and a higher buffer to reduce forecast error and surprise for conservative planning.

Policy Structure and Cost Allocation

Deductibles and limits shift cost between employer and insurer. The calculator allocates per-claim loss into deductible, covered layer, coinsurance, and excess beyond the limit. Annual aggregate caps can push additional payout back to the employer once exceeded. Enabling defense inside limits reduces effective coverage in a simplified way. Adjust legal share and coverage gaps to reflect contracts, exclusions, and claims-handling responsibilities for each layer modeled today.

Premium Estimation and Budget Planning

Estimated premium is derived from expected insurer payout, then loaded for expenses and taxes. Treat the displayed range as an indicative corridor rather than a quote. Use the reserve buffer to size internal self-funded accounts and to align cash planning with volatility. Present value totals discount future costs and help compare funding strategies, including higher deductibles versus higher limits under the same risk posture each year.

Scenario Comparison and Reporting

Scenario names help you compare multiple structures side by side. Save up to five scenarios locally to test how controls, trends, and program design change the outcome. Export CSV for spreadsheet analysis and audit trails, and generate PDF for management review. Use the projection table to highlight inflection points where frequency, severity, or aggregates start to dominate annual cost and premium estimates with consistent documentation attached.

1) What does “incident rate per 100 employees” represent?

It is the expected number of claims in a year for every 100 employees. If you enter 6, the model assumes about 0.06 claims per employee per year.

2) When should I use the conservative severity model?

Use it when your losses are skewed by occasional large cases, or when you need a cautious budget. The multiplier inflates severity to approximate higher-percentile outcomes.

3) How does coinsurance affect employer cost?

Coinsurance makes the employer pay a fraction of the covered layer after the deductible. This increases out-of-pocket costs but can reduce expected insurer payout and premium.

4) What happens if the annual aggregate limit is exceeded?

The insurer payout is capped at the aggregate. Any additional expected payout above that cap is shifted back to the employer as aggregate excess in the estimate.

5) Why include a legal and admin factor?

Defense, investigation, and settlement handling often add material cost beyond direct loss. The factor estimates that friction, and the employer share setting splits it for planning.

6) Are premium results a quote?

No. Premium is estimated from expected insurer payout plus loads and fees. Use it to compare scenarios, then validate assumptions with your broker and legal advisors.