Employers Liability vs WSIB: What’s the Difference and Why It Matters

When it comes to insurance, few topics cause more confusion than employers liability vs WSIB (Workers’ Compensation Insurance). While both are designed to support workers who experience injuries or illnesses on the job, the coverage, legal implications, and responsibilities they create for employers are vastly different. And if you're running a business in Ontario or elsewhere in Canada, not knowing the difference could leave you exposed to potentially devastating costs.

At KASE Insurance, we work with Canadian employers every day to craft customized insurance solutions that keep their workers protected and their companies compliant. This blog will break down what WSIB covers, what employers' liability insurance is for, and why many businesses may need both to ensure full protection.

What Is WSIB (Workers’ Compensation Insurance) in Ontario?

The Workplace Safety and Insurance Board (WSIB) is Ontario’s publicly funded workers’ compensation program. If you employ workers in Ontario, chances are you’re required to register with the WSIB and contribute to the province’s workers' compensation fund. Other provinces operate similar models with their own workers’ compensation boards, such as WorkSafeBC in British Columbia or the WCB in Alberta.

WSIB is a no-fault coverage system, meaning injured employees don’t need to prove their employer was negligent to receive benefits. In return, they give up the right to sue their employer for most work-related injuries or illnesses.

WSIB provides coverage for:

• Medical expenses (e.g., hospital bills, rehab)
• Lost wages (usually a portion of the worker’s regular pay)
• Occupational disease claims
• Survivor benefits to family members
• Return-to-work and retraining programs
  

Because this system operates through a provincial workers' compensation fund, it’s typically mandatory, and most employers are exempt from being sued in court for workplace injuries covered by WSIB.

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Why Do You Need Employers' Liability Insurance?

If you already pay into the WSIB, you might be wondering: why would I also need separate coverage for the same kinds of risks? The key lies in the gaps WSIB doesn’t cover, and that’s where employers' liability insurance comes in.

Employers' liability insurance protects you from lawsuits outside WSIB’s jurisdiction, such as:

• Legal action taken by an employee not covered under WSIB
• Claims from contract workers, subcontractors, or part-time employees not eligible
• Third-party lawsuits (e.g., a worker’s family sues for negligence)
• Situations where WSIB denies a claim or where coverage was accidentally missed

This type of policy is sometimes called contingent employers' liability, because it “kicks in” when your workers' comp program doesn’t apply or isn't sufficient.

Employers' liability insurance coverage may include:

• Legal defence costs
• Settlements or court-awarded legal fees
• Medical expenses and rehabilitation for the injured person
• Lost wages if awarded through a civil suit

Key Differences Between Employers' Liability and WSIB

Having employers’ liability and WSIB benefits explained—and understanding the differences—can help mitigate confusion.

Here’s a quick breakdown to clarify the distinction:

In short, WSIB covers workers' compensation requirements, while employers' liability insurance fills in the gaps. Having both ensures you’re protected whether a claim comes through a workers' compensation board or civil court.

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Why Some Employers May Be at Risk

Here’s where things get tricky: not all workers are covered by WSIB. While most industries are mandated to participate, there are exceptions, and misunderstandings can create exempt categories that go uninsured.

For instance, your company may hire freelancers, family members, contract workers, or part-time staff not covered by your WSIB registration. If any of them experience a workplace injury and decide to sue, you could be on the hook for legal action, settlements, and medical expenses—unless you have employers' liability insurance.

Also, WSIB does not accept every injury. For example, if an employee's illness is later deemed not work-related, they may try to recover costs through a civil lawsuit. Without additional coverage, your business could be left unprotected.

Real-World Scenarios Where Employers' Liability Applies

Let’s say your construction company brings on a subcontractor for a six-week project. That subcontractor isn’t covered under your WSIB policy, but is injured on-site due to unsafe conditions. They may file a lawsuit claiming negligence, and WSIB won’t help you defend that claim. 

Or imagine an office worker develops a repetitive strain injury over time, but WSIB denies the claim on the grounds it wasn’t severe or not probably work-related. That employee might still pursue damages through civil court.

Employers' liability insurance ensures you have coverage for these unexpected gaps. Otherwise, you’re entirely dependent on a system that may not apply.

What Does Employers' Liability Insurance Cover?

A typical employers' liability insurance cover includes:

• Legal fees and court costs
• Settlements or judgments awarded in a lawsuit
• Compensation for bodily injury not accepted by WSIB
• Coverage for personal injury claims like emotional distress
• Protection from lawsuits filed by employees’ families

It’s important to note that employers' liability is often bundled into larger business insurance packages or added as an extension to your commercial general liability insurance. 

Do You Need Both WSIB and Employers' Liability Coverage?

Yes, in most cases. It’s not an either/or scenario—you need both to fully protect your team and your company.

Think of it this way: WSIB = your legal obligation (in most cases) and Employers' liability = your financial safety net.

This is especially important for businesses that:

• Work with subcontractors, consultants, or gig workers
• Have a mix of full-time and part-time employees
• Operate across provincial lines or in industries with different WSIB rules
• Have higher physical risk (e.g., trades, construction, manufacturing)

Protect Your Business with 360º Coverage from KASE Insurance

Understanding the difference between employers liability vs WSIB can mean the difference between a protected business and a financially vulnerable one. While WSIB is a mandatory and essential part of doing business in Ontario and many other provinces, it doesn’t cover every situation. That’s where employers' liability insurance becomes a critical part of your risk strategy.

At KASE Insurance, our team takes pride in helping businesses across Canada understand and manage their risk, including where workers' compensation insurance ends and where employers liability insurance needs to begin. We’ve helped hundreds of clients balance compliance with protection, offering:

• Expert advice on WSIB requirements
• Customized employers' liability insurance packages
• Integrated business insurance that adapts as your company grows

Workplace injuries happen, let KASE Insurance help you take the guesswork out of your coverage. Contact us today!