Workers Comp Policy Differences in Canada and the US

RIMS: Canada and United States Have Different Employer Practice Liability Needs from Commercial Policies

The Canadian commercial marketplace requires standard policy wording for Employer Practice Liability (EPL) policies very different from U.S. policies, according to the Canadian Underwriter and discussed by experts taking part in a panel discussion at the RIMS Canada Conference in St. John’s, Newfoundland.

The Risk Management Counsel of Canada presented a seminar, ‘Employer’s Dream: Insurer’s Nightmare! Employer’s Liability: The Need for a Canadian Model,’ at the conference.

Panel participants noted EPL policies differ from Commercial General Liability (CGL) policies and Director & Officer (D&O) Liability policies, since EPL policy cover “intentional incidents” such as harassment of one employee by another.

Elizabeth Forster, panel member and a partner at Toronto’s Blaney McMurtry, noted there is a breadth of issues relating to EPL policies. These include the fact “there are a huge number of different areas of liability an employer faces and, secondly, we [Canadians] don’t have consistent policy language.” Panel member Jorge Segovia, a partner at Cox and Palmer in St. John’s, pointed out a pair of main differences between Canada and the United States showcasing the need for Canadian insurers to approach EPL coverage in a distinct manner.

First is the definition of wrongful dismissal in Canada and in the United States, according to Segovia. In the United States, a wrongful dismissal claim can take place if the termination involves some form of statutory breach such as discrimination.

In Canada, “wrongful dismissal is simply the fact a terminated employee has not been given reasonable notice or pay in lieu of notice, because our [employment] contracts, if it’s not built in, have an implied term requiring the reasonable notice or termination or payment in lieu of notice,” Segovia commented. According to Segovia, “most Canadian EPL insurers will likely try to remove that coverage.” (workersxzcompxzkit)

Segovia said the other distinction has to do with punitive damages. “A lot of EPL claims involve claims for punitive damages. In the U.S., punitive damages are not covered by EPL policies because the size of the damages being awarded in the U.S. is quite high.” In Canada,, where the awards are quite modest, most insurers agree to cover the damage awards. Segovia noted that “It certainly would be useful over time to develop standard wording and clauses such as what we have for our CGL policies.”

Author Robert Elliott,executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, health care, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. He can be contacted at: Robert_Elliott@ReduceYourWorkersComp.com or 860-786-8286.

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