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What is employers' liability insurance?

Small or large businesses must protect themselves from risks that can occur at their workplace, and potentially, impact their bottom line.

As an employer, it is important to recognize the everyday possibility of your employees suffering from work-related injuries or illnesses. Employers’ liability insurance covers you against losses that are (a) not covered by general liability insurance and (b) do not fall under any workers’ compensation insurance protections.

Who needs employers' liability insurance?

If you are a business owner with any amount of employees who can suffer injuries or illness at work (or even death), you should consider this form of insurance.

Although not mandatory, employers’ liability insurance is usually purchased as part of a commercial general liability policy. Many vendors or partners you encounter may also require you to have this insurance coverage to do business with them. Not having this coverage can leave you and your business vulnerable to debilitating costs.

What’s covered and not covered under employers' liability insurance?

Some risks are covered by worker’s compensation, some fall within employer insurance, and some areas where claims can be made are not covered at all.

It’s important to make sure you are covering all bases to protect your business. General liability may already cover some areas or other commercial insurance protections you already have. Speak with your insurance provider about what you are covered for and where you might need additional coverage.

Types of insurance claims common to employers' liability insurance

There are countless variants of employers’ liability claims, so it wouldn’t be possible to list them all here. That said, here are some examples:

Workplace sickness

Let’s say you work out of an old building, with an outdated HVAC system. Due to the lack of maintenance, the system causes some of your employees to have respiratory problems. They, in turn, sue your company, causing you to lose $183,000 on legal fees, lost wages and medical bills.

Equipment-related injury

Your employee injured another employee using your company’s equipment, preventing the injured employee from working. Both blame the injury on your company’s poor supervision and safety protocols. You get sued and are forced to pay $93,000 for medical bills, legal expenses and lost wages.

Mental health troubles

The amount of work causes your employee to suffer a nervous breakdown and is forced to take a leave of absence to improve their mental well-being. As a result, they sue your company for not doing anything to prevent the issue. The legal fee and monetary judgement amount to $42,000.

How much does employers’ liability insurance cost?

Every workplace is different, and the dynamics specific to your business will affect your employers’ liability insurance costs. That said, small business owners in Canada can expect to pay somewhere in the low thousands per year for decent coverage.

Some of the biggest factors that will impact your premiums include:

• Where your business is located: A more industrial area can have its own risks, versus retail or office space environments.
• How many employees you have: The more employees you have, the higher the likelihood of injury claims and risks.
• Revenue: The more your business earns, the more you will need to protect it from claims or liability lawsuits.
• Claims history: A higher claims history will make you a higher risk in the eyes of your insurance company, which could raise your costs.
• Coverage requirement: Additional needs, such as cyber or business interruption insurance, will increase your insurance rates.

These and other issues can affect your cost and the general price range for employers’ liability insurance. Searching comparison sites like LowestRates.ca or talking to your broker can give you a better sense of what your specific costs will be.