Employers’ Liability Insurance

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