What is Employer’s Liability Insurance?
Employer’s liability insurance is essentially an insurance policy for workers covering work-related injuries, illnesses, and deaths. As an employer, one is legally responsible for the safety of workers during work and at the workplace. It is rare to find a place of employment that is completely exempt from workplace injury or death.
What Does Employer’s Liability Insurance Cover?
Most of what the insurance covers are the following:
- Employee discrimination (age, race, sex, disability, etc.)
- Third-party lawsuits
If an employee gets injured using a ladder during work and sues the ladder manufacturing company, that company can, in return, sue the employer for negligence on their part.
- Lawsuits filed on behalf of the family members of deceased and/or disabled workers
- Family bodily injury lawsuits can occur if family members suffer physical harm from taking care of the sick workers.
Role of Provincial Workers’ Compensation Fund
Most employers choose to pay into their respective provincial worker’s compensation fund in order to comply with the rules and regulations for employers. However, those exempt from doing so or who choose not to participate in the program face heavy repercussions if a claim is filed against them for work-related injuries or death. They may be subject to the following:
- Legal fees to deal with the lawsuit
- Medical costs
- Settlement payments to the injured/victim’s family
Typically, the Worker’s Compensation Board follows a “no-fault” approach where workers are not required to prove negligence on behalf of the employer that directly caused the harm or injury. However, an employer’s liability insurance requires proof of negligence and is a coverage that is typically added to Commercial General Liability (CGL) policies.
Another important aspect to note is that even if employers regularly pay into the Worker’s Compensation Provincial Fund, they are not free from all potential claims and liability. If the Worker’s Compensation Board denies the applicability of the claim, the employee is eligible to take legal action against the employer.
An important distinction between the two types of policies is that worker’s compensation covers most accidents that cannot be prevented at the workplace. However, employer’s liability insurance protects the employer against a wide variety of claims that can be filed against an employer.
Example of Workplace Injury
Let’s review an example of how workplace injury can occur and hence lead to legal ramifications for the employer.
The employer utilizes an old building for his clothing business. Several employees ended up contracting Legionnaire’s disease, which is essentially an airborne bacterial disease that leads to coughing, shortness of breath, and other respiratory symptoms.
After investigations into the matter, it is determined that the cause of it was an old air conditioning system that the employer failed to maintain up to a certain standard. It would lead to the employer being responsible for the workers’ medical bills, missed wages, and related damages.
Benefits of Employer’s Liability Insurance
1. Displaying coherent compliance with the law
To be protected by the law, it is important to show compliance. The employer displays a show of trustworthiness by participating in the provincial workplace compensation fund and getting employer’s liability insurance. It also enhances their reputation and would entice people to work for an employer who follows the rules and guidelines.
2. Caring for employees
It is important for an employer to demonstrate caring for the well-being of their employees. It provides an additional psychological benefit because if the workers feel happy and safe in their workplace, it enables better mental health and makes them better and more efficient.
3. Coverage for lost wages or medical bills
Worker’s compensation does not cover all the many types of costs and incidentals from an incident. Thus, an employer’s liability insurance policy enables employers to be protected from extreme and sudden financial strains caused by claims that would otherwise not be covered through worker’s compensation funds.
4. Coverage for legal fees
Like lost wages and bills, legal fees can accumulate quickly. Hence, employee liability insurance provides an additional protective layer to employers against such financial burdens.
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