Employers’ Liability Insurance

Employers’ Liability Insurance

Protect your company from costs associated with employee injuries, illnesses, or death, whether you participate in your provincial workers’ compensation fund or not.

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Partnerships with over 50 leading Canadian insurance providers

Liability insurance for employers

Despite your best efforts to protect your employees, no workplace or job is ever accident-free. Employee injuries, illnesses, and deaths while on the job can happen anytime.

Canadian employers paying into their province’s workers’ compensation fund to cover bodily injuries or illnesses their employees suffer in the workplace or as part of their jobs are still liable for damages. Companies that are exempt from paying provincial workers’ compensation or that choose not to face even greater financial exposure.

Regardless of industry or the type of injury or illness one of your employees suffers that’s caused by an accident or negligence, an employer can still be held legally responsible to pay for their lost wages, medical expenses, and additional compensation if they are sued.

What is employers’ liability insurance?

Employers’ liability insurance is a policy featuring coverage that’s designed to handle employee-related claims for injuries or illnesses that isn’t covered by your provincial workers’ compensation board.

Also called contingent employers’ liability, it’s a form of general liability protection that complements government-mandated disability insurance commonly referred to as “workers comp”. Employers’ liability insurance shields business owners from costs associated with employee-related workplace injuries, illnesses, disease, and deaths.

What does it cover?

A typical employers’ liability insurance policy includes protection for:

  • Third-party lawsuits by an employee or their family. If one of your employees is killed or disabled on the job, they could launch a lawsuit against you for damages. If one of your employees suffers a significant illness or disease in their line of work, their family could also sue you for compensation for costs associated with the suffering they endure caring for your sick employee.

Note: an employers’ liability insurance policy does not cover deliberate acts that cause injuries or illnesses to employees, or any injuries or illnesses your employees sustain while travelling.

You may require additional coverages to include in your policy. For example, a standard employers’ liability insurance policy does not provide coverage for lawsuits by employees alleging discrimination, sexual harrassment, or wrongful termination. You can add what’s called employment practices liability insurance to your policy to account for those risks. Speak to a Zensurance licensed broker if you require that coverage.

Who needs it?

A wide variety of employers can benefit from an employers’ liability insurance policy. Your business may require it if:

  • You determine where, when, and how your employees work
  • You provide your employees with the materials, tools, and equipment they need to do their jobs
  • You do not allow an employee to find a substitute for a job if they are unavailable
  • You have or hire temporary or part-time employees, including students and volunteers

Your business may not need to buy employers’ liability insurance if:

  • You have no employees and are a sole proprietor or independent professional
  • All of your employees are immediate family members
  • Your employees live and work outside of Canada

Speak to a Zensurance broker about whether you should include employers’ liability coverage in your overall policy.

How much does it cost?

Insurance providers offer various premiums for the policies they underwrite. They determine the price of your policy based on these factors:

  • Where your business is located and the type of building (office, warehouse, restaurant, etc.)
  • How many employees you have
  • The industry you’re in and the goods and services you provide
  • The equipment and materials you provide to your employees
  • The amount of coverage you need (higher levels of coverage typically have a higher annual premium)
  • Your years of experience as a business owner
  • Your annual and gross projected revenue
  • Your insurance claims history

Claims Examples

Problem: Your warehouse is an older building when an outbreak of Legionnaires disease infects several employees. The HVAC system in the building was the cause as it had not been regularly inspected and maintained. The injured employees sue you for bodily injury and lost wages.

Outcome: Your employers’ liability insurance may cover the cost of employees’ medical expenses and lost wages, and provide you with funds to defend yourself in court and any out-of-court or court-ordered settlement.

Problem: One of your temporary employees suffers post-traumatic stress resulting from the rigors of their employment at your company that they allege you did nothing to mitigate. They sue you for compensation.

Outcome: Your employers’ liability insurance may cover the cost of your legal fees and any compensation awarded to the plaintiff by the court or any out-of-court settlement.

Problem: At a job site, one of your employees accidentally injures another employee with a power tool. It’s determined that you failed to provide adequate supervision and safety equipment. The injured employee sues you for damages.

Outcome: Your employers’ liability insurance may cover the cost of the injured employee’s medical expenses, lost wages, and provide you with funds for your legal defence.

Frequently asked questions

What other kinds of business insurance do I need?

The insurance coverage your business needs depends on the industry you’re in and the type of goods and services you provide. Typically, most small businesses need commercial general liability (CGL) insurance, commercial property insurance, and cyber liability insurance. Speak to a licensed Zensurance broker about the coverages your policy needs to include.

If I have student interns or apprentices working for my business, will employers’ liability insurance provide coverage for them?

Yes. An employers’ liability insurance policy extends protection to temporary and part-time employees, student interns, apprentices, and volunteers in addition to covering your full-time employees.

How frequent are work-related injuries in Canada?

According to data from the Association of Workers’ Compensation Boards of Canada, there were 924 employee deaths because of work-related causes in 2020. In terms of occupational disease-related fatalities, and among provinces with over 100,000 workers, Newfoundland and Labrador (nine deaths), Ontario (4.4 deaths), and Alberta (4.3 deaths) have the highest five-year averages.

Furthermore, occupational disease fatality rates increased in nine of 12 Canadian jurisdictions in 2020 versus the average fatality rate between 2017-2019. Ontario (18%), British Columbia (17%), and Alberta (11%) saw the largest increases.

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Protect your employees and business from the cost of workplace-related fatalities, injuries, and illnesses.

Get an employers’ liability insurance policy from Zensurance. We’ll shop our partner network of more than 50 insurance providers to get the coverage you need at the best rate available.