Plan coverage using practical workplace risk inputs. See projected costs, limits, and deductible impacts instantly. Export results, share with stakeholders, and negotiate smarter renewals.
Employer liability cost scales with exposure and payroll. A team of 25 employees with $1,200,000 payroll represents $48,000 average wage. If staffing rises to 40, exposure increases 60%, and expected claims rise proportionally under the same frequency assumption. Payroll also drives limit planning; a starting point is 20% of payroll, then rounding to market limits.
Frequency is entered as claims per 100 employees per year. Using 0.80, 25 employees produce 0.20 expected claims annually. Severity starts at $45,000 per claim and is trended by inflation. At 6% trend, trended severity becomes $47,700 before risk adjustments. Industry and jurisdiction multipliers then adjust severity; construction at 1.60 raises modeled severity 60% before safety.
Per-claim limits cap covered severity, while deductibles shift losses to the employer. With a $25,000 deductible, the retained portion per claim is the smaller of deductible and covered severity. When expected claims are 0.20, expected annual retained cost is about $5,000 before fees. Aggregate limits cap annual insurer loss cost; $2,000,000 limits extreme modeled years. Higher deductibles often reduce premium, but increase volatility in retained cash flow.
The calculator converts loss cost into premium by applying expense load and profit, then surcharges for broker fees, taxes, and payment plans. For example, a 35% expense load plus 5% profit increases pure premium by 40%. A 3% broker fee, 2.5% taxes, and 1% payment surcharge then increase the discounted premium by 6.5%. Risk management discounts reduce premium after loading; a 5% discount on $10,000 saves $500.
Use the benchmark payroll rate to sanity-check assumptions quickly. A rate of $0.25 per $100 payroll implies $3,000 base premium before multipliers. Compare this to the loss-cost estimate and reconcile differences by adjusting frequency, safety score, or experience modifier. Review the sensitivity chart to see premium moves with limits and deductibles. Document scenarios, export CSV or PDF for reviews, and update inputs quarterly.
| Scenario | Employees | Payroll | Freq/100 | Severity | Limit | Deductible | Safety | Est. Premium |
|---|---|---|---|---|---|---|---|---|
| Baseline | 25 | $1,200,000 | 0.80 | $45,000 | $1,000,000 | $25,000 | 75 | $9,850 |
| Higher Limit | 25 | $1,200,000 | 0.80 | $45,000 | $2,000,000 | $25,000 | 75 | $10,120 |
| Better Safety | 25 | $1,200,000 | 0.80 | $45,000 | $1,000,000 | $25,000 | 90 | $8,980 |
1) What does employer liability insurance typically cover?
It commonly addresses employee injury lawsuits outside standard workers’ compensation, including negligence allegations. Coverage terms vary by insurer, jurisdiction, endorsements, and policy limits.
2) Why do limits and deductibles change the estimate?
Limits cap what the insurer may pay per claim, while deductibles shift part of each loss to you. Higher deductibles usually reduce premium but increase retained costs.
3) How should I choose claim frequency and severity?
Use your loss runs, incident logs, and broker benchmarks. If data is thin, test multiple scenarios and focus on worst‑case sensitivity using higher severity and trend.
4) What is the experience modifier in this tool?
It is a multiplier reflecting prior loss performance relative to expectations. A value below 1.00 improves the estimate, while a value above 1.00 increases it.
5) Why is there a payroll-rate benchmark?
Some pricing approaches start with payroll exposure and class rates. The benchmark helps sanity‑check the loss‑cost model when claim assumptions are uncertain.
6) Is this output a binding premium quote?
No. It is a planning estimate for budgeting and option comparisons. Actual pricing depends on underwriting review, legal environment, coverage forms, and negotiated terms.
Important Note: All the Calculators listed in this site are for educational purpose only and we do not guarentee the accuracy of results. Please do consult with other sources as well.