Compare Employer's Liability Insurance Quotes

What is employer's liability insurance?

As a business owner in Ontario, you may carry general liability or business insurance. This protects your business against losses caused by production defects or damage to your property. While it covers claims from third parties like customers or vendors, it doesn’t extend to injuries or illnesses suffered by your employees.

So, what happens if one of your employees gets injured at the workplace and sues you for negligence? This is where employer's liability insurance comes into play.

Whether you’re a small consultancy employing a mere five people or a mid-sized warehouse operator with 1,000 employees, don’t make the mistake of overlooking employer's liability insurance. This insurance coverage safeguards your business against any unexpected employee claims that could lead to significant financial losses.

When an employee is injured, falls ill, or suffers a fatal accident due to workplace conditions, this insurance provides coverage for lost wages, medical expenses, and legal compensation. Employer's liability insurance acts as a financial buffer, helping you manage the costs associated with such claims without severely impacting your business operations.

This coverage complements that of your province’s workers’ compensation board. In Ontario, the Workplace Safety and Insurance Board (WSIB) compensates workers for injuries or illnesses caused by their work or worksite.

However, there may be instances where a claim might not be covered under the WSIB or other provincial workers' compensation boards. Or an employee might choose to sue for employer negligence. Employer's liability insurance covers you against such a lawsuit or legal expenses, offering an additional layer of protection for your business.

Employer's liability insurance is not just a safety measure, but an investment in your employees’ welfare, your business, and its stability. Having the right coverage ensures that both you and your employees are protected, allowing your business to thrive without the financial burden of unexpected liabilities.

What does employer's liability insurance cover?

Employer's liability insurance policies are designed to protect you and your business from financial and legal consequences that can arise when an employee is injured, becomes ill, or dies due to a workplace accident or workplace conditions. This coverage goes beyond what is typically covered by the standard workers’ compensation fund.

Let’s take a look at what it covers:

• Coverage for employee lawsuits and legal expenses: The biggest benefit of employer's liability insurance is coverage for lawsuits or legal expenses if an employee decides to sue you for a workplace-related injury or illness. Let’s say your employee is injured by a faulty machine that they allege was caused by inadequate maintenance. They then file a lawsuit to seek additional compensation for their injuries, distress, and lost wages. In this situation, your employer's liability insurance will cover legal costs like attorney fees, court costs, and any settlement fees.
  
• Limited coverage for third-party claims: Beyond direct employee claims, employer's liability insurance also provides some coverage for third-party claims. For example, when a spouse or dependent of an employee (who dies or is severely injured on the job) sues you for damages and lost wages.

What is not covered by employer's liability insurance?

Now that we know what employer's liability insurance can be used for, let’s look at what is excluded from this coverage.

• It does not include employee litigations like wrongful termination, discrimination, or harassment. This is covered by employment practices liability insurance.
  
• It does not include property damage to your building, equipment, or other physical assets, or damage to another person’s property. This is covered by property damage liability insurance.
  
• It does not include coverage for lawsuits brought against professional service providers, like doctors and lawyers. This is covered by professional liability insurance.
  
• It does not include damage caused to a customer or vendor because of a faulty product or service. This is covered by product liability insurance.
  
• It does not include lawsuits or damages incurred due to intellectual property infringement (copyright, patents, or trademarks). This is covered by intellectual property insurance.
  
• It does not include coverage for personal and property damages, replacement costs, and legal costs in the event of an accident involving a commercial vehicle. This is covered by commercial auto insurance, which is mandatory by law in Ontario.

Is employer's liability insurance coverage mandatory in Canada?

Employer's liability insurance is not mandatory for business owners in Canada.

However, you should absolutely purchase employer's liability insurance coverage, especially if you are in an industry where there is a high risk of accidents like construction or manufacturing. Regardless of your industry or the type of work involved, it’s highly recommended to opt for employer's liability insurance because it protects your business from unexpected employee claims. Without such coverage, a single lawsuit can devastate a small or medium-sized business, leading to significant financial strain or even bankruptcy.

This insurance coverage not only provides a financial buffer, but also demonstrates that you are a responsible employer who values the well-being of your employees. By proactively managing risks, you build a resilient business that can weather challenges while maintaining operational stability. Lastly, employer's liability insurance ensures that your business is equipped to handle these risks, allowing you to focus on what matters most – running and growing your business smoothly.

How much does employer's liability insurance cost?

The cost of employer's liability insurance hinges on a variety of factors. For small to medium-sized businesses it can range from a few hundred dollars per year to a few thousand. The best way to know for sure is to get a custom quote from a commercial insurance provider or broker.

Below are some of the factors that will influence the final premium.

Factors that affect employer's liability insurance rates

How much you will pay for employer's liability insurance depends on:

• Industry: In construction or manufacturing industries, workplace injuries are more common, deeming it a high-risk industry. High-risk industries face higher premiums as compared to low-risk businesses like consultancies.
  
• Nature of work: Similarly, due to the higher risks associated with and the potential for costly claims, professional services like doctors and lawyers may see higher premiums. On the other hand, office-based businesses may have lower premiums.
  
• Employees: The more employees, the greater the risk. Large businesses that employ several thousands of employees will have higher premiums.
  
• Annual revenue: Higher revenues mean higher risks, and greater potential for larger settlements. High-revenue businesses need higher coverage limits, which are reflected in their insurance premiums.
  
• Insurance claims history: Businesses with a history of insurance claims or liability lawsuits are considered higher risk and therefore pay higher premiums.
  
• Coverage requirements: Any additional or specialized coverage you opt for – for instance, cyber or business interruption insurance – will increase your insurance rates.

How to get the cheapest employer's liability insurance quotes

Getting the best employer's liability insurance quote is possible. Follow these tips to secure the best rate:

• Compare quotes: Insurance providers each have their own formulas for calculating premiums, so it’s important to shop around and compare offers to find the best rate for your business. An insurance broker can help you navigate the market and find the best deals tailored to your specific needs
  
• Bundle products: Insurance companies may provide better deals when you combine multiple commercial insurance products. You might also be able to bundle your personal and business insurance for additional savings.
  
• Consider paying annually: Paying your premiums annually in a lump sum instead of monthly can sometimes result in a lower overall cost, as it secures your commitment for a longer period. Be sure to ask about available payment options and terms.
  
• Improve workplace safety: Implementing safety measures and reducing workplace accidents can improve your claims history, which can lead to lower premiums.
  
• Increase deductibles: Opting for a higher deductible can reduce your premium costs. Just ensure that the deductible amount is manageable for your business.
  
• Maintain a good claims history: A history of fewer claims can make you a more attractive client to insurers, potentially resulting in lower rates.