What is employers' liability insurance?

It covers lawsuits by your own employees, or their families, for bodily injury, illness or death arising out of their work for you, where workers' compensation does not apply or does not bar the claim. It pays defence costs and damages up to the limit. In Canada it is usually added as an extension to a commercial general liability policy.

I'm registered with WSIB. Do I still need employers' liability?

Often yes, as a backstop. WSIB registration bars most injury lawsuits from covered workers, but not every claim. Workers excluded from the plan, such as executive officers and certain casual workers, are not barred, and some situations fall outside the bar. A contingent employers' liability extension on your general liability policy covers those gaps and is usually inexpensive.

Which Ontario businesses don't have to register with WSIB?

The WSIB lists examples including banks, trust and insurance companies, trade unions, private day cares, travel agencies, photography businesses, barber shops and many hair salons, and funeral or embalming establishments. These businesses can apply for coverage voluntarily. If they don't, their employees can sue them for workplace injuries, so employers' liability insurance becomes essential.

Are business owners covered by WSIB?

Not automatically outside construction. In Ontario, sole proprietors, partners, independent operators and executive officers are not covered unless they buy optional insurance from the WSIB, which they can do only if they also cover any employees. Most construction businesses must cover owners as well as employees. Owners without coverage need private disability or accident insurance for their own injuries.

Doesn't my general liability policy cover injured employees?

No. A commercial general liability policy covers injury to customers, visitors and the public, but excludes bodily injury to your employees arising out of their employment, along with related claims by their family. An employers' liability extension rewrites that exclusion so employee claims are covered, subject to its own limit and any carve-outs, such as construction or demolition work.

What is the difference between employers' liability and EPL?

Employers' liability covers physical injury or illness of employees at work. Employment practices liability covers claims about how you treat employees, such as wrongful or constructive dismissal, harassment, discrimination and retaliation. Workers' compensation does not generally bar wrongful dismissal claims, so almost every employer has some EPL exposure, whatever its WSIB status.

What happens if an uninsured employer's worker is injured in Ontario?

Part X of the WSIA lets the worker sue the employer for injuries caused by defective premises or equipment, the employer's negligence, or a co-worker's negligence. The worker is not treated as accepting the risk just because they knew of the danger, and contributory negligence only reduces damages. Any liability insurance the employer has is held for the worker's benefit.

Can an injured worker sue a business other than their employer?

Yes, in some cases. A worker of a WSIB-covered employer cannot sue other covered employers, but may be able to sue a business outside the system. The worker must then choose, generally within three months, between claiming WSIB benefits and suing. For the business being sued, that is a third-party claim handled under its general liability policy.

How much employers' liability coverage should I carry?

Enough to fund the defence and damages for a serious, permanent injury, which can include years of lost income and future care. Businesses outside the workers' compensation system carry the full exposure, so they usually need a meaningful extension limit and an umbrella above it. Registered employers often carry a lower contingent limit as a backstop.

Employer Liability Insurance

Workers' compensation stops most injury lawsuits, but not all of them. This covers the ones it doesn't.

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In short

Employers' liability insurance pays damages and defence costs when an employee sues the business for a work-related injury or illness that workers' compensation does not cover or does not bar. It matters most for employers outside the provincial system, such as Ontario businesses in industries where WSIB coverage is optional, and for workers the system excludes. It is usually added to a commercial general liability policy, which otherwise excludes injury to employees.

Last reviewed October 26, 2026

Canadian insurers we compare for liability programs: 17; Canadian insurers we compare for liability programs
Time an Ontario business has to register with the WSIB after hiring its first employee: 10 days; Time an Ontario business has to register with the WSIB after hiring its first employee
Time an injured worker has to choose between WSIB benefits and suing a third party (WSIA, s. 30): 3 months; Time an injured worker has to choose between WSIB benefits and suing a third party (WSIA, s. 30)
Groups the WSIB never covers, including stunt and circus performers and sports competitors: 4; Groups the WSIB never covers, including stunt and circus performers and sports competitors

Employers' liability insurance covers lawsuits by your own employees for injuries and illnesses suffered at work. Most businesses assume workers' compensation handles all of that, and for many it does: in Ontario, the WSIA bars covered workers from suing covered employers. But WSIB coverage is optional in some industries, owners and executive officers are excluded unless they buy coverage, and some workers fall outside the plan entirely. Where the bar stops, the right to sue returns, and a standard commercial general liability policy excludes injury to employees.

We check your WSIB status, map who actually works for you, and add the right employers' liability extension at a limit that reflects a serious injury. Because the name is easily confused with employment practices liability, we also cover the other side: wrongful dismissal, harassment and discrimination claims, coordinated with your directors and officers coverage.

What's covered

Employee injury lawsuits outside the workers' compensation bar
Claims by employees of businesses not required to register with WSIB
Family members' claims for loss of care and companionship
Defence costs for employee injury actions
Contingent employers' liability for claims that slip past WSIB
Employment practices liability for dismissal and harassment claims
Claims by executive officers and casual workers outside the plan

What employers' liability insurance covers

Employers' liability covers one thing: lawsuits by your own employees, or their families, for bodily injury, illness or death arising out of their work for you. It pays your defence and any damages awarded or settled, up to the limit.

It exists because the policy you probably rely on for injury claims leaves employees out. A commercial general liability policy covers injury to customers, visitors and the public, but contains an employer's liability exclusion for bodily injury to your employees in the course of their employment. In a typical Canadian wording, that exclusion applies whether you are liable as an employer or in any other capacity, and it extends to the employee's spouse, child, parent, brother or sister.

Covered: damages and defence for a suit by an employee injured at work, where workers' compensation does not apply or does not bar the action.
Covered: related claims by family members, such as loss of care and companionship, where the policy extends to them.
Not covered: wrongful dismissal, harassment and discrimination claims. Those belong under employment practices liability, explained below.
Not covered: workers' compensation premiums, assessments or benefits you owe to the WSIB or another board.
Not covered: injury to the public, which your CGL already handles, or injury in a vehicle, which belongs on commercial auto.

Why workers' compensation doesn't settle the question

Every province runs a no-fault workers' compensation system built on a trade-off. Injured workers receive benefits without proving fault, and in exchange they lose the right to sue. In Ontario, section 26 of the Workplace Safety and Insurance Act, 1997 (WSIA) says that entitlement to benefits is in lieu of all rights of action against the worker's employer or its executive officers. Section 28 then bars a worker of a Schedule 1 employer from suing any Schedule 1 employer, or that employer's directors, executive officers and workers, for the injury.

That bar is powerful, but it only protects businesses inside the system, and only for workers who are entitled to benefits. Sections 28 to 31 apply to a worker whose injury entitles them to benefits under the insurance plan. If your business or the injured person is outside the plan, nothing in those sections stops the lawsuit.

Not registered when you should be: the WSIB requires most Ontario businesses with employees to register within 10 calendar days of hiring their first employee.
Not required to register: some industries are outside mandatory coverage, and employers there are exposed to suits by their own staff unless they apply for WSIB coverage.
Workers the plan excludes: casual workers employed outside the employer's industry, outworkers, and executive officers of most corporations.
Equipment supplied without operators: under section 28(4), the bar does not apply where another employer supplied a vehicle, machinery or equipment on a purchase or rental basis without workers to operate it.

Who is outside WSIB coverage in Ontario

WSIB coverage is mandatory for any industry named in Schedule 1, Part I or Schedule 2 of Ontario Regulation 175/98, unless Schedule 1, Part II excludes it. The WSIB lists examples of businesses that do not have to register but can choose to cover their employees.

Ontario workers and businesses outside automatic WSIB coverage
Group	WSIB status	What it means for liability
Banks, trust and insurance companies, trade unions	Not required to register; can apply	Employees can sue the employer for a workplace injury unless coverage is in place
Private day cares, travel agencies, photography businesses	Not required to register; can apply	Same exposure; common among small owner-run firms such as travel agents and photographers
Barber shops, many hair salons, funeral and embalming establishments	Not required to register; can apply	Same exposure; see barber shop insurance
Sole proprietors, partners and executive officers outside construction	Not covered unless they buy optional insurance	The owner has no WSIB benefits for their own injury, and the statutory bar does not apply to them
Independent operators outside construction	Not required to register	Hiring businesses often ask for proof of status, which the operator can confirm through a WSIB questionnaire
Casual workers outside the employer's industry; outworkers	Excluded from the plan by WSIA s. 11(1)	Can sue under Part X of the WSIA, which governs uninsured employment
Foreign diplomats, sports competitors, stunt and circus performers	Never covered by the WSIB	Entertainment, sports and event businesses carry this exposure directly

Construction is the main exception: most construction businesses must cover owners as well as employees, including independent operators, sole proprietors, partners and executive officers. Our guide to the contractor's full coverage stack explains why WSIB still isn't the whole answer on a job site.

Outside Ontario, each province's board sets its own list of covered industries, excluded workers and optional coverage for owners. The principle is the same everywhere: where the board's coverage ends, the right to sue usually returns. We check the rules in each province where you have staff.

What an uninsured employer faces: Part X of the WSIA

Ontario does not leave uninsured employment to ordinary negligence law. Part X of the WSIA applies to industries outside Schedules 1 and 2, and to casual workers and outworkers within them. It tilts the field toward the injured worker in ways that make employers' liability insurance more important, not less.

Section 114: a worker may sue the employer for an injury caused by a defect in the ways, works, machinery, plant, buildings or premises used in the business, by the employer's negligence, or by the negligence of another employee acting within the scope of their employment.
Section 115: a worker may also sue the person for whom work is being done under a contract, and the contractor and subcontractor, in similar circumstances.
Section 116: an injured worker is not considered to have voluntarily accepted the risk just because they knew of the defect or negligence, and contributory negligence does not bar recovery. It only reduces the damages.
Section 117: if the employer is insured against its liability to a worker, the insurance is deemed to be for the worker's benefit, and the insurer cannot pay the employer until the worker's claim is satisfied.

In practical terms, an uninsured employer cannot defend a claim by arguing that the worker knew the machine was dangerous, and cannot escape liability because the worker was partly at fault. A serious injury claim can therefore exceed what a small business could pay. That is the gap employers' liability fills.

How the policy works: endorsement, limit and exclusions

Most Canadian businesses buy employers' liability as an extension to their CGL rather than a standalone policy. The extension rewrites the employer's liability exclusion so that it no longer applies to claims by employees. Intact Insurance's published Employers' Liability Extension (form L538) is a good example of how the wording is built.

Who is covered: the exclusion does not apply to a claim or action brought by a Canadian resident employee for bodily injury sustained in the course of employment or while performing duties on your behalf.
Carve-outs: the extension still excludes injury arising from aircraft, injury to anyone employed in violation of the law as to age, and injury arising from structural alterations, new construction or demolition operations. Contractors need to check this closely.
Limit: a separate employers' liability limit shown on the declarations is the most the insurer will pay for compensatory damages, including care and loss of services, arising out of bodily injury to one or more people in any one accident or event.
Trigger: like the CGL it attaches to, employers' liability is normally written on an occurrence basis, so the policy in force when the injury happens responds, even if the suit comes later.
Partial extensions: some insurers offer narrower versions, such as an extension limited to office and clerical staff, which leave other employees excluded.

Employers registered with the WSIB often carry a contingent employers' liability extension as a backstop for claims that slip past the bar. Employers outside the system need a full extension at a meaningful limit, with an umbrella above it for serious injuries.

Employers' liability vs. employment practices liability

The two names sound alike and are often confused, but they cover entirely different claims. Employers' liability is about physical injury at work. Employment practices liability (EPL) is about how you hire, manage and dismiss people.

How employers' liability and employment practices liability differ
	Employers' liability	Employment practices liability (EPL)
What triggers it	Bodily injury, illness or death of an employee arising out of their work	Allegations of wrongful or constructive dismissal, harassment, discrimination or retaliation
Relationship to WSIB	Fills the gap where workers' compensation doesn't apply or doesn't bar the suit	Largely separate from WSIB, which does not generally bar wrongful dismissal claims
Who usually needs it	Employers outside the system, or with excluded workers	Almost every employer, because dismissal claims arise in any business
Typical policy trigger	Occurrence: the policy in force when the injury happened	Usually claims-made: the policy in force when the claim is made
How it is bought	An extension to the CGL	A standalone policy or part of a management liability package with D&O
What it pays	Damages for injury and loss of services, plus defence	Defence costs, settlements and awards, subject to exclusions such as fines and statutory entitlements

The line between the two is not always clean. In Decision No. 1227/19, Ontario's Workplace Safety and Insurance Appeals Tribunal held that a worker's constructive dismissal action was barred because the facts were inextricably linked to workplace harassment that is compensable under the WSIA. Commentary notes the result is exceptional: the Tribunal generally has not found that the WSIA removes the right to sue for wrongful dismissal. For defence costs in disputes either policy might exclude, legal expense insurance can add a further layer.

Common exclusions, and how to close the gaps

Typical gaps around employee injury and employment claims
Excluded or limited	How to cover it
Injury to employees under a CGL with no extension	Add an employers' liability extension at a limit that reflects a serious injury
Extension limited to office and clerical staff	Ask for a full extension that covers every class of employee you have
Construction, demolition and structural alteration work	Register with the WSIB where required, and place construction risks with insurers that accept them; see construction insurance
Workers employed under the legal minimum age	Not insurable; comply with employment standards and occupational health and safety rules
Owners' own injuries	Optional WSIB insurance, or private disability and accident coverage
Injury in a company vehicle	Commercial auto coverage, including accident benefits
Dismissal, harassment and discrimination claims	Employment practices liability
Employees outside Canada	Confirm the territory and resident-employee wording; add foreign coverage for staff abroad

A worked example (hypothetical)

A private day care in Ottawa has six staff and, because its industry does not require WSIB registration, it has never applied for coverage. A staff member lifting a child onto a change table is injured when a wall-mounted unit, installed by the owner years earlier, tears away from the wall. She has a serious back injury and cannot return to the work.

She has no WSIB claim, so the section 28 bar does not apply. She sues the day care under section 114 of the WSIA, alleging a defect in the premises and the employer's negligence. The day care argues that she had complained about the unit being loose. Under section 116, that knowledge does not mean she accepted the risk, and any contributory negligence only reduces her damages.

If the day care's CGL has no employers' liability extension, the employer's liability exclusion applies and the business defends and pays the claim itself. With a full extension at a $2,000,000 limit, the insurer defends the action and pays any damages up to that limit, and under section 117 the proceeds are held for the worker's benefit. The alternative, applying for WSIB coverage before an injury, would have replaced the lawsuit with no-fault benefits.

What employers' liability insurance costs

An employers' liability extension is usually priced as part of the CGL, so the same rating base drives it: payroll and number of employees, the type of work they do, and the business's claims history. Whether you are registered with the WSIB matters most. For a registered employer, the extension is a contingent backstop and is often inexpensive. For an employer outside the system, the insurer is taking on every workplace injury, so expect closer questions about operations and safety.

Workforce: headcount and payroll by job class, use of casual or seasonal staff, and staff working off site.
Operations: physical work, machinery, lifting and driving carry more injury risk than desk work.
Controls: health and safety program, training records, equipment maintenance and incident reporting.
Limit: the employers' liability limit you choose, and whether an umbrella sits above it.
EPL, if added: number of employees, turnover, recent dismissals, written HR policies and prior employment claims.

Bundling the extension into a small business package or a wider program through bundle and save is usually the most efficient way to buy it.

How we place employers' liability

Insurabiz is an independent brokerage that works only in business insurance. We don't work for one insurer, so we can match the wording to the workforce you actually have.

1Confirm your status: we check whether your industry must register with the WSIB or the board in each province where you have staff, and whether owners have optional coverage.
2Map the workforce: we list employees, casual and seasonal staff, independent operators and anyone working outside Canada.
3Read the CGL: we check the employer's liability exclusion and any extension already on your policy, including carve-outs and limits.
4Market it: we take the submission to the insurers on our panel of 17 whose appetite fits your operations, with EPL where you need it.
5Compare wording: we lay out resident-employee wording, construction carve-outs, limits and EPL triggers side by side.
6Review annually: we revisit the program when you hire, add a province, change your WSIB status or start a new kind of work.

If an employee is injured or makes a claim

1Get medical help and make the scene safe. Meet any reporting obligations under occupational health and safety law.
2If you are registered, report the injury to the WSIB or your provincial board within the required time.
3Notify your broker and insurer in writing as soon as an injury could lead to a claim, and immediately on receiving a demand letter or statement of claim.
4Preserve evidence: photos, the equipment involved, maintenance records, training records and witness names.
5Do not admit liability or discuss settlement without your insurer's consent.

Our claims team works alongside you and the insurer's defence counsel from first notice to resolution.

Good to know

Frequently asked questions

What is employers' liability insurance?: It covers lawsuits by your own employees, or their families, for bodily injury, illness or death arising out of their work for you, where workers' compensation does not apply or does not bar the claim. It pays defence costs and damages up to the limit. In Canada it is usually added as an extension to a commercial general liability policy.
I'm registered with WSIB. Do I still need employers' liability?: Often yes, as a backstop. WSIB registration bars most injury lawsuits from covered workers, but not every claim. Workers excluded from the plan, such as executive officers and certain casual workers, are not barred, and some situations fall outside the bar. A contingent employers' liability extension on your general liability policy covers those gaps and is usually inexpensive.
Which Ontario businesses don't have to register with WSIB?: The WSIB lists examples including banks, trust and insurance companies, trade unions, private day cares, travel agencies, photography businesses, barber shops and many hair salons, and funeral or embalming establishments. These businesses can apply for coverage voluntarily. If they don't, their employees can sue them for workplace injuries, so employers' liability insurance becomes essential.
Are business owners covered by WSIB?: Not automatically outside construction. In Ontario, sole proprietors, partners, independent operators and executive officers are not covered unless they buy optional insurance from the WSIB, which they can do only if they also cover any employees. Most construction businesses must cover owners as well as employees. Owners without coverage need private disability or accident insurance for their own injuries.
Doesn't my general liability policy cover injured employees?: No. A commercial general liability policy covers injury to customers, visitors and the public, but excludes bodily injury to your employees arising out of their employment, along with related claims by their family. An employers' liability extension rewrites that exclusion so employee claims are covered, subject to its own limit and any carve-outs, such as construction or demolition work.
What is the difference between employers' liability and EPL?: Employers' liability covers physical injury or illness of employees at work. Employment practices liability covers claims about how you treat employees, such as wrongful or constructive dismissal, harassment, discrimination and retaliation. Workers' compensation does not generally bar wrongful dismissal claims, so almost every employer has some EPL exposure, whatever its WSIB status.
What happens if an uninsured employer's worker is injured in Ontario?: Part X of the WSIA lets the worker sue the employer for injuries caused by defective premises or equipment, the employer's negligence, or a co-worker's negligence. The worker is not treated as accepting the risk just because they knew of the danger, and contributory negligence only reduces damages. Any liability insurance the employer has is held for the worker's benefit.
Can an injured worker sue a business other than their employer?: Yes, in some cases. A worker of a WSIB-covered employer cannot sue other covered employers, but may be able to sue a business outside the system. The worker must then choose, generally within three months, between claiming WSIB benefits and suing. For the business being sued, that is a third-party claim handled under its general liability policy.
How much employers' liability coverage should I carry?: Enough to fund the defence and damages for a serious, permanent injury, which can include years of lost income and future care. Businesses outside the workers' compensation system carry the full exposure, so they usually need a meaningful extension limit and an umbrella above it. Registered employers often carry a lower contingent limit as a backstop.

Sources

Workplace Safety and Insurance Act, 1997, S.O. 1997, c. 16, Sched. A (ss. 11, 26 to 30 and 113 to 117). Government of Ontario, e-Laws (official Word consolidation), Current consolidation, accessed October 26, 2026.
Do you need to register with us?. Workplace Safety and Insurance Board (WSIB), Accessed October 26, 2026.
Can I choose to have WSIB insurance? (optional insurance). Workplace Safety and Insurance Board (WSIB), Accessed October 26, 2026.
Operational Policy Manual 12-01-04, Coverage Status. Workplace Safety and Insurance Board (WSIB), December 5, 2024.
Commercial General Liability Coverage: Employers' Liability Extension (L538, version 2). Intact Insurance, March 2019.
Right of action statute-barred where constructive dismissal linked to workplace injury (WSIAT Decision No. 1227/19). Borden Ladner Gervais LLP, February 4, 2020.

This page is general information, not insurance or legal advice. Coverage depends on your policy wording and the insurer. Speak with a licensed broker about your situation.

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