July 15, 2013
A recent court case has brought into question private insurance coverage over WSIB for company executives.  

Recently a company that did not provide workers compensation for executives has experienced a string of lawsuits.

The company removed workers compensation coverage for its management team and replaced it with disability insurance. The firm, a scrap metal operation in Hamilton, believed the change would provide the same coverage at a lower cost.

A superior court judge dismissed the claims against the insurer, holding that the claimant was an employee at the time of the incident, and an “employee injury exclusion” in the insurance company’s commercial general liability policy excluded it from having to compensate for the employee’s injuries.

The company appealed on the grounds that the employee was an executive officer, not an employee. Even if he was an employee, said the company, the employee injury exclusion does not extend to employees who are also executive officers. The scrap metal company lost the appeal. In his decision, the appeal court judge concluded the following:
  • Commercial general liability coverage is intended to protect the insured against losses to third parties or to the public arising out of the operation of the insured’s business. The coverage is not intended to protect the insured against losses to its own employees from workplace injuries.
  • While the insurance policy’s employee injury exclusion makes no distinction between employees and executive officers, it states that the insurance holder is not covered for bodily injury to one of its employees arising out of and in the course of employment with it.
  • The man’s injuries occurred as a result of his employment with the company.
The appeal court judge notes in his decision that the company had at least one, and likely two, options for eliminating the gap in its coverage. It could have maintained its original coverage of executive officers under the Workplace Safety and Insurance Act, or purchased an employer’s bodily injury liability coverage extension from the insurance company.