Workers’ Compensation vs Employers’ Liability Insurance: What’s the Difference?

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What’s the Difference Between Employers’ Liability Insurance and Workers’ Compensation Insurance in Canada?

While both policies are designed to cover the costs of injuries or illnesses to workers that happen on the job, the primary difference between employers’ liability insurance and workers’ comp in Canada is employers’ liability insurance protects the employer or business for compensation, awards, and expenses if sued by employees for injuries they suffer on the job which are not covered under a Worker’s Compensation plan.

Workers’ comp is designed to cover no-fault insurance for an injured employee’s medical expenses, rehabilitation, and a portion of their lost wages caused by a workplace injury or related health issue. In addition, if one of your employees dies from their injuries, workers’ comp pays death benefits to their family.

In other words, if an employer is deemed responsible for an occupational accident injuring an employee, employers’ liability protection is triggered if the employer faces a claim or legal action from an injured employee, their family, or another party. 

What Does Employers’ Liability Insurance Cover?

An employers’ liability insurance policy can help your business pay for claims or lawsuits related to bodily injury expenses, settlements, court costs and legal fees.

Although policies may vary between companies, a typical employers’ liability insurance policy covers a claim or lawsuit launched by an employee or their family against your business for compensation because of an illness or injury they suffered while on the job. 

It provides protection for an employer if one of their employees is injured and worker’s comp is insufficient, the benefits don’t apply, or if the injury was caused by negligence.

However, employers’ liability insurance is not designed to cover expenses associated with claims or lawsuits related to discrimination, harassment, or wrongful dismissal. Therefore, you require employment practices liability insurance to deal with those challenges. Speak to a licensed Zensurance broker if you have questions about employment practices liability insurance.

What Is Workers’ Compensation Insurance?

Workers’ compensation insurance, or workers’ comp, is regulated by the province or territory where you live. It is a type of workplace insurance funded by mandatory employer premiums and designed to provide injured workers with wage-loss benefits, coverage for medical expenses and rehabilitation, and resources for employers to help prevent injuries from occurring at their places of business.  

Although there are a few exemptions, a business or employer cannot opt out of workers’ comp. There may be subtle differences between provinces, but in general, any small business with employees must register with the Workers’ Compensation Board (WCB) in its jurisdiction. To determine if your business is exempt from registering with the WCB in your jurisdiction, visit the applicable Board in the links below.

Here’s a quick breakdown of the WCB in each province and territory:

• Alberta: WCB Alberta requires employers to open an account with them within 15 days of hiring their first full- or part-time employee, including temporary, contract, and volunteer employees or family members.

• British Columbia: WorkSafeBC states employers – an individual or organization – are required to carry their coverage when hiring one or more workers on a full- or part-time basis and temporary or contract employees and family members.

• Manitoba: The Workers’ Compensation Board of Manitoba holds that all businesses in mandatory industries must register for coverage.

• New Brunswick: WorkSafeNB says all employers with three or more employees must register for coverage within 15 days of starting the business, be they full-time, part-time, temporary, contract workers, or family members.

• Newfoundland and Labrador: WorkplaceNL requires employers to register for coverage for any employee (full- and part-time, temporary, subcontractors, family members).

• Nova Scotia: The Workers’ Compensation Board of Nova Scotia states registration is mandatory for most employers in the province with three or more employees within 10 days of hiring a third worker.

• Ontario: The Workplace Safety and Insurance Board (WSIB) of Ontario says businesses have 10 days to register with them from the day they hire their first employee.  

• Prince Edward Island (PEI): The Workers’ Compensation Board of PEI states employers must register for coverage if they employ one or more workers. Businesses are required to renew their registration annually.

• Quebec: Workers’ Compensation for Quebec (CNESST) requires employers with at least one employee to register within 60 days of hiring their first worker.

• Saskatchewan: The Saskatchewan Workers’ Compensation Board says all employers hiring workers must register and create an account in mandatory industries within 30 days of hiring.

• Northwest Territories and Nunavut: The Workers’ Safety and Compensation Commission requires all businesses to register for coverage.

• Yukon: The Workers’ Safety and Compensation Board requires employers to register within 10 days of starting business operations.

Penalties are imposed on businesses in mandatory industries that fail to register with their provincial or territorial workers’ comp boards. 

How Do I Get Employers’ Liability Insurance for My Small Business?

This coverage is usually available as part of commercial general liability insurance. If it isn’t, you can typically add it to your policy. To get the employers’ liability insurance protection your small business needs, complete an online application in a few minutes to receive a free quote from Zensurance. 

With over 50 insurance providers in our partner network, our friendly broker team can find and customize the policy you need.