Employers’ liability insurance in Canada typically costs between $300 and $5,000 per year, depending on payroll, industry risk, and claims history. It covers employee lawsuits for work-related injuries or illnesses not covered by workers’ compensation, protecting employers from legal and financial risks.
Employers' liability insurance shields Canadian business owners from employee lawsuits related to workplace injuries or illnesses that fall outside the scope of workers' compensation. While many assume that this coverage is automatically included in provincial workers' compensation programs, the reality is more nuanced.
This guide breaks down the cost of employers’ liability insurance in Canada, what it covers (and what it doesn’t), and the factors that influence your premiums so that you can make an informed, cost-effective decision for your business.
What is Employers' Liability Insurance?
Employers’ liability insurance provides financial protection when an employee sues their employer for a work-related injury or illness not fully covered by workers’ compensation.
Employers’ liability insurance is typically bundled with your workers’ compensation program through your provincial board. In some provinces or for specific contract work, additional standalone or excess coverage may be required to meet contract stipulations or industry risk standards.
Average premiums vary depending on:
- Your total payroll
- Industry classification and risk level
- Claims history
- Type and scope of coverage selected
- Location (province)
Employers' Liability Insurance Cost at a Glance
For small Canadian businesses in low-risk industries, coverage can be part of a broader policy for as low as $300–$800 per year. In higher-risk industries, such as construction or logistics, premiums can range from $2,000 to $ 5,000 or more annually, especially when combined with commercial general liability (CGL) or umbrella policies.
At KASE Insurance, we help clients uncover gaps in provincial coverage and ensure the right liability protections are in place, especially for contractors, multi-province operators, and fast-growing companies.
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Employers’ Liability Insurance Coverage and Exclusions
Coverage for an employer’s liability insurance policy depends on your company’s operations and priorities. Here’s what a policy typically covers and excludes.
What Does Employers’ Liability Insurance Cover?
- Bodily Injury Lawsuits: When an employee believes that your negligence contributed to their workplace injury (e.g., failure to provide proper safety equipment), this policy helps cover:
- Legal defence costs
- Court fees
- Medical expenses
- Settlements or damages (up to the policy limit)
- Occupational Disease Claims: Exposure to harmful substances or repetitive strain injuries may trigger lawsuits that are not automatically resolved by workers' compensation. For example, prolonged chemical exposure in manufacturing settings.
- Third-Party Over Actions: If an injured employee sues a third party (e.g., equipment manufacturer), and that third party then sues your business for contributing to the injury, this policy helps cover that liability.
What Does Employers’ Liability Insurance Exclude?
- Punitive damages (awarded to punish misconduct)
- Intentional acts or gross negligence
- Liabilities assumed by contract (e.g., indemnity clauses)
- Discrimination, harassment, or wrongful termination (covered under employment practices liability insurance)
Tip: Employers’ liability does not replace commercial general liability insurance or professional liability insurance coverage; it complements them.
Who Needs Employers’ Liability Insurance in Canada?
Most Canadian employers are required to register with a provincial workers' compensation board, which provides basic no-fault coverage for workplace injuries. However, employers’ liability becomes critical when:
- You are a contractor or subcontractor working on jobs requiring high-limit or extended liability coverage
- You operate across provinces with differing coverage and liability laws
- You face claims outside the workers' comp framework (e.g., negligence)
- Your client contracts mandate higher liability limits
Coverage by Province
|
Province |
Workers’ Comp Board |
Additional Employers’ Liability Needed? |
|
Ontario |
Usually covered unless required by contract |
|
|
British Columbia |
Covered, but some employers opt for top-ups |
|
|
Alberta |
Covered, optional excess coverage available |
|
|
Quebec |
Covered, but legal liability differs |
|
|
Saskatchewan |
Covered unless operating out of province |
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Employers’ Liability vs. Workers’ Compensation vs. General Liability
Here’s how employers’ liability differs from workers’ compensation coverage and general liability.
|
Coverage Type |
What It Covers |
Who It Protects |
Fault Required? |
|
Workers’ Compensation Insurance |
Medical costs and lost wages due to workplace injury |
Injured employee |
No |
|
Employers’ Liability Insurance |
Lawsuits for negligence beyond workers' comp |
Employer |
Yes |
|
Commercial General Liability (CGL) Insurance |
Third-party injury or property damage |
Employer |
Yes |
Even though workers' compensation is a no-fault system, employers can still be sued under certain exceptions. This makes employers' liability coverage a vital risk-management tool.
What are the Key Pricing Factors of Employers’ Liability Insurance Cost?
Your final employer's liability insurance cost depends on factors like industry type, payroll, and claims history.
- Industry Type: High-risk industries, such as roofing, demolition, or food manufacturing, will typically incur higher premiums compared to low-risk sectors like technology, accounting, or design.
- Total Payroll: Premiums are calculated using a rate per $100 of payroll. A higher payroll equals higher risk exposure, which equals higher costs.
- Claims History: A clean claims history improves your experience modification factor (MOD) and lowers your premium.
- Coverage Limits: Many policies begin at $100,000 per occurrence. If your contracts require $1M–$2M in coverage, your premium will increase proportionally.
- Location: Provincial regulations, legal environments, and workers’ comp structures impact how and where excess liability coverage is needed.
- Bundled Coverage: Bundling with CGL, commercial auto, or umbrella liability can yield a 10%–15% discount on total premiums.
Sample Premium Ranges in Canada (Estimates)
Here’s a sample of premium ranges for different business types, taking into account the factors discussed above.
|
Business Type |
Payroll Range |
Estimated Annual Premium* |
|
Boutique Design Firm |
<$500K |
$300–$800 |
|
Mid-size Manufacturing Plant |
$1M–$5M |
$1,500–$4,000 |
|
Construction Company |
$5M+ |
$4,000–$10,000+ |
*Estimates vary by industry, claims history, and coverage limits.
How to Choose the Right Coverage Limit
To select the right coverage limit, consider your industry, workforce size, and the specific risks your organization faces. Below are key considerations when determining how much employers’ liability insurance coverage your business needs in Canada:
1. Consider Minimum Legal Limits
Choose a minimum legal limit that suits your business size, risk, and type. Many insurers offer the following baseline coverage:
- $100,000 per occurrence
- $500,000 per policy limit for disease
- $100,000 per employee for disease
These limits may be enough for small, low-risk operations, such as professional offices or retail shops. However, for industries with higher exposure, such as manufacturing, construction, or logistics, these amounts may be insufficient for larger claims.
Tip: Review your provincial requirements, as some jurisdictions or sectors may have specific minimum standards that apply.
2. Review Contractual Limits
Many client contracts, especially in construction or consulting, require minimums of $1 million to $2 million per occurrence. Failure to meet contractual insurance obligations can result in the following:
- Disqualification from bids or tenders
- Project delays
- Breach of contract penalties
If your business regularly enters into third-party contracts, ensure your employers’ liability insurance quote includes sufficient limits to meet or exceed client requirements.
3. Get an Umbrella & Excess Liability Coverage
For additional peace of mind, consider umbrella or excess liability insurance. These extend your existing employers’ liability limits to cover larger or unforeseen claims. It’s often cost-effective and customizable, allowing you to scale based on your risk appetite.
Companies managing multiple worksites or large teams in physically demanding environments can especially benefit from this extended coverage.
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How to Get an Employer’s Liability Insurance Quote
At KASE Insurance, we make getting an employer's liability insurance quote simple for Canadian businesses. Our expert brokers compare policies from top insurers to help you secure comprehensive coverage tailored to your business’s unique risks at a competitive rate.
To get started, book a free consultation with our team. We’ll guide you through every step and ensure your coverage aligns with your operations, workforce size, and industry requirements.
You’ll need the following:
- Total annual payroll
- Number of employees
- Description of operations
- 3–5 years of claims history
- Desired coverage limits
- Safety certifications or training programs (for discounts!)
Book Your Free Employers’ Liability Review
FAQs About Employers’ Liability Insurance in Canada
Yes, in most cases. It’s typically bundled with provincial workers’ comp programs, but extra coverage may be required depending on your industry or contract.
Yes. Workers’ comp is no-fault, but certain exceptions allow employees to sue employers for negligence. Employers’ liability insurance fills that gap.
No. CGL covers third-party claims (like clients or vendors). Employers’ liability covers internal employee lawsuits. Both are essential.
With the right documentation, KASE can provide quotes within 24–48 hours and bind coverage in just a few business days.
You could be forced to pay legal defence costs and damages out of pocket. You may also lose out on contract opportunities.
Add Employers’ Liability Insurance Belongs in Your Risk Strategy
Employers’ liability insurance is more than a legal or contractual box to tick; it’s a safeguard for your people, your profitability, and your long-term success.
A robust policy ensures:
- You’re eligible for bigger contracts
- You’re protected from the financial fallout of lawsuits
- You’re credible in the eyes of partners, vendors, and employees
KASE Insurance offers employer-first, compliance-ready policies designed to protect what matters most to you. Contact a KASE Employer's Liability Insurance advisor today and receive a quote for your business.