Workers’ compensation policies issued by American Casualty Company of Reading, Pennsylvania—a subsidiary of the CNA Financial Corporation—follow a dual-structure framework that defines how much the insurer will pay. While Part One of the policy provides unlimited statutory coverage for medical expenses and lost wages, Part Two (Employers’ Liability) is restricted by specific dollar limits, typically starting at $100,000 per accident.
Understanding the Structure of American Casualty Policies
To understand "limits" in the context of an American Casualty workers' compensation policy, one must first distinguish between the two primary components of the contract. Unlike standard liability insurance (such as auto or general liability), workers' compensation does not have a "total policy aggregate" that caps the amount spent on a worker’s medical recovery.
Part One: Statutory Workers' Compensation
Part One of the American Casualty policy covers the employer’s obligations under the workers' compensation laws of the states listed in the policy declarations. In 2026, as in previous years, there are no dollar limits on Part One. If an employee suffers a catastrophic injury requiring $2 million in spinal surgery and lifelong nursing care, American Casualty is obligated to pay the full amount prescribed by state law. The "limit" here is not a dollar figure in the policy, but rather the specific benefit schedules set by state legislatures (e.g., 66.6% of the average weekly wage for indemnity).
Part Two: Employers’ Liability
This is where the term "limits" becomes legally and financially significant. Employers’ Liability (EL) protects the business if an employee (or their family) sues the employer for negligence that falls outside the "exclusive remedy" of workers' compensation. For instance, if a spouse sues for loss of consortium or if a third party sues the employer for contributory negligence (a "third-party over" claim), Part Two provides the defense and settlement funds.
These limits are explicitly stated on the Information Page (declarations) of the American Casualty policy.
The Three Pillars of Employers’ Liability Limits
When you examine an American Casualty insurance binder or policy document, you will see three distinct numbers representing the limits for Employers' Liability. These are standard across the industry but are applied strictly by CNA’s underwriting guidelines.
1. Bodily Injury by Accident (Each Accident)
This is the maximum amount American Casualty will pay for all claims arising out of a single occurrence, regardless of how many employees are injured in that specific accident. If three employees are injured in a single machinery explosion, the "Each Accident" limit is the total pool available for all their EL claims combined.
2. Bodily Injury by Disease (Policy Limit)
This is an aggregate limit for the entire policy period (usually one year). It represents the most the insurer will pay for all claims resulting from occupational diseases (such as respiratory issues from chemical exposure) during the year, no matter how many separate incidents or employees are involved.
3. Bodily Injury by Disease (Each Employee)
This is a sub-limit within the "Policy Limit" for disease. It dictates the maximum amount payable for a single employee’s disease-related claim. Even if the total Policy Limit is $500,000, a single employee cannot recover more than this specific "Each Employee" amount for a disease-based suit.
Standard vs. Increased Limits in 2026
While state laws often mandate "basic" limits, many businesses opt for "increased limits" to satisfy contractual requirements with clients or to provide a buffer against rising litigation costs.
| Limit Type | Basic/Statutory Limits | Common Increased Limits | High-Exposure Limits |
|---|---|---|---|
| BI by Accident | $100,000 | $500,000 | $1,000,000 |
| BI by Disease (Policy) | $500,000 | $500,000 | $1,000,000 |
| BI by Disease (Employee) | $100,000 | $500,000 | $1,000,000 |
Why American Casualty Policyholders Increase Limits
In the 2026 economic environment, the "Basic" limits of 100/500/100 are often considered insufficient for medium-to-large enterprises. Many general contractors and government entities now require subcontractors to carry a minimum of $500,000 or $1,000,000 in Employers' Liability limits. Furthermore, the Umbrella or Excess Liability policy usually requires the underlying workers' compensation policy to have at least $500,000 in EL limits to "attach" or provide coverage over the top.
How Limits Affect Premium Calculations
The cost of an American Casualty policy is primarily driven by payroll and class codes (risk levels of the work performed), but the choice of limits also impacts the final premium.
- The Increased Limits Factor: American Casualty applies a percentage surcharge to the manual premium if you choose limits higher than the state minimum. For example, moving from a $100,000 limit to a $1,000,000 limit might add 1% to 3% to the total premium.
- Loss Cost Multipliers: As a CNA company, American Casualty uses specific loss cost multipliers (LCMs) filed with state insurance departments. These multipliers account for the company's operating expenses and the anticipated cost of claims at various limit levels.
- Experience Modification Rate (MOD): While the MOD factor is mostly influenced by the frequency and severity of Part One (statutory) claims, a large Part Two settlement that hits the policy limits can significantly inflate the MOD for subsequent years, leading to higher premiums across the board.
Jurisdictional Variations and Monopolistic States
It is critical to note that American Casualty's "limits" operate differently in certain jurisdictions.
- Monopolistic States: In Washington, Ohio, North Dakota, and Wyoming, workers' compensation is purchased through a state fund. These state funds do not automatically include Employers' Liability. Businesses operating in these states must often purchase "Stop-Gap" coverage. If American Casualty provides this Stop-Gap coverage via an endorsement, the limits discussed above will apply to that specific endorsement.
- State-Specific Minimums: Some states, like California or Illinois, may have different baseline requirements for Employers' Liability. American Casualty must issue policies that at least meet these legal minimums, which may be higher than the standard 100/500/100.
The Role of the "Exclusive Remedy" Doctrine
The reason Part Two limits are often lower than General Liability limits is the Exclusive Remedy Doctrine. This legal principle holds that in exchange for guaranteed medical and wage benefits (Part One), employees give up their right to sue their employer for negligence.
However, there are "gaps" in this doctrine where Part Two limits become the primary defense:
- Third-Party Over Actions: An injured worker sues a machine manufacturer, and the manufacturer in turn sues the employer for poor maintenance.
- Dual Capacity: An employer is sued not as an employer, but in another capacity (e.g., as the landlord of the building where the injury occurred).
- Intentional Torts: In some states, if an employer's conduct is deemed "grossly negligent" or "willfully harmful," the exclusive remedy may be pierced, though many policies exclude truly intentional criminal acts.
Practical Considerations for 2026 Renewals
When reviewing an American Casualty workers' compensation quote or renewal in 2026, business owners should perform a "Limit Gap Analysis."
Evaluating Contractual Obligations
Check your Master Service Agreements (MSAs). Most modern contracts specify that the "Employers' Liability" section of your workers' comp policy must meet a certain threshold. If your policy shows $100,000 and the contract requires $1,000,000, you are in breach of contract and may not be paid for your services.
Assessing the Umbrella Attachment Point
If your business carries a $5 million Umbrella policy, verify the "underlying limits" requirement. If the Umbrella requires $500,000 in underlying Employers' Liability but your American Casualty policy is only set at $100,000, you have a coverage gap. In the event of a $2 million judgment, you would be personally responsible for the $400,000 gap between your primary limit and where the Umbrella starts.
Understanding Defense Costs
Typically, in American Casualty policies, the cost of defending a lawsuit (attorney fees, court costs) is in addition to the limits of liability. This means that if you have a $500,000 limit and the legal defense costs $100,000, you still have the full $500,000 available for a settlement or judgment. However, it is always wise to confirm this "defense outside the limits" provision in your specific policy form.
Frequently Asked Questions
Does American Casualty provide unlimited coverage for medical bills?
Yes, under Part One (Statutory Workers' Compensation), there is no dollar limit on necessary and reasonable medical treatment for a compensable work injury. The limits stated on the policy only apply to Part Two (Employers' Liability) lawsuits.
Can I change my limits mid-term?
Usually, yes. American Casualty allows for policy endorsements to increase limits during the policy year. This is often necessary when a business takes on a new contract with higher insurance requirements. The premium will be adjusted pro-rata for the remainder of the term.
What happens if a claim exceeds my Employers' Liability limits?
If a court awards a judgment against your business that exceeds the limits stated in your American Casualty policy, and you do not have an Umbrella or Excess policy to cover the difference, the business is responsible for paying the excess amount out of its own assets.
Are legal fees included in the Part Two limits?
In most standard CNA/American Casualty workers' compensation forms, defense costs are paid in addition to the limits of liability. This means legal fees do not "erode" the amount of money available to pay a settlement, though you should verify the specific "Supplementary Payments" section of your policy.
Why does my policy show "Statutory" instead of a number for Part One?
The term "Statutory" is used because the limits are not set by the insurance company, but by the laws of the state. Since those laws can change and provide for "unlimited" medical care, a fixed dollar amount cannot be listed.
Next Steps for Policyholders
To ensure your business is adequately protected, locate your CNA or American Casualty Information Page. Look for the "Employers' Liability" section under "Item 3.B." If the numbers are $100,000/$500,000/$100,000, consult with your insurance broker to determine if these limits align with your current contractual obligations and your Umbrella policy requirements. Increasing these limits is often one of the most cost-effective ways to enhance your corporate risk management profile in 2026.
