____ coverage occurs when an employer is sued by an employee for negligence in some capacity other than as an employer, such as being sued in the capacity of a manufacturer.

• A. Employers Liability
• B. Product liability
• C. Dual-capacity claims
• D. Direct liability

Answer: (C)

Dual-capacity coverage protects an employer when an employee sues the employer for negligence in a capacity other than the employer-employee relationship, such as the employer acting as a manufacturer. While workers’ compensation provides the employee with a remedy for work-related injuries, it does not cover tort claims arising from the employer’s other roles. In these cases, the employers liability policy that includes dual-capacity coverage steps in to pay damages from the employee’s lawsuit in that second capacity. For example, if a worker is injured by a product manufactured by the employer and sues the employer as the product maker, dual-capacity coverage applies. This differs from product liability, which would come from a separate product-manufacturer liability policy, and from direct liability, which would cover negligence arising strictly within the normal employer-employee context.