If you’re a business owner in Singapore, you might have come across Employers Liability Insurance, and Workers Compensation Insurance (also known as Work Injury Compensation Insurance, or WICA Insurance). These two types of insurance policies are related, but Workers Compensation Insurance offers vastly superior coverage compared to Employers Liability Insurance, without any significant difference in premiums.
In this article, we’ll cover the following points:
- 5 key differences between Workers Compensation Insurance vs Employers Liability Insurance
- Which policy should I get?
- Why is it important to insure my business against workers’ injuries?
- Where can I buy a Workers Compensation Policy?
Comparison between Workers Compensation Insurance vs Employers Liability Insurance:
| Difference No. | Coverage | Workers Compensation | Employers Liability |
| 1 | Employer’s Liability under Common Law | Covered Standard policies will typically provide $10 million annual coverage | Covered Standard policies will typically provide $10 million annual coverage |
| 2 | Medical Expenses Due to Work-Related Injury/Disease | Covered | Not Covered |
| 3 | Lost Wages While on Medical leave Due to Work-related injury/disease | Covered | Not Covered |
| 4 | Compensation for Work-Related Permanent Disability | Covered | Not Covered |
| 5 | Compensation for Work-Related Death | Covered | Not Covered |
Let’s illustrate the differences between these two insurance policies with a couple of examples.
Example 1:
Say you run a construction company. One of your general workers accidentally suffers an arm fracture while operating heavy machinery. Your injured worker visits the A&E department to get his injury treated. Doctors determine surgery is necessary. The A&E consultation costs $150, and the surgery stitching costs $7,000. Your worker is prescribed a series of medications and rehabilitation sessions by the doctor, which costs $1,000. Your worker is provided with 2 months of medical leave. If we assume your employee earns a monthly salary of $1,000, then you’re liable to compensate your worker for $2,000 in lost wages ($1,000 per month, times two).
Here’s a handy table to summarise what costs Workers Compensation and Employers Liability would pay for, in this instance:
| Work Injury Expenses | Workers Compensation | Employers Liability |
| A&E Doctor’s Consultation Costs: $150 | Covered | Not Covered |
| Wound Stitching Costs: $100 | Covered | Not Covered |
| Medication Costs: $50 | Covered | Not Covered |
| Lost Wages for 7 Days of Medical Leave: $750 | Covered | Not Covered |
| Total Costs: $1,050 | $1,050 Covered | $0 Covered |
Workers Compensation Insurance would pay for all the costs stated in this illustration. However, Employers Liability Insurance would not pay for any of the costs incurred. If you only had an Employers Liability policy, you would have to pay $10,050 out of your own pocket. If you didn’t compensate your injured worker for these work-related injury expenses, they could simply file a report with MOM. It is a criminal offence to withhold compensation for work-related injuries/diseases, and penalties include up to 1 year in jail, and/or up to a $10,000 fine.
Let’s move now to our second illustration.
Example 2:
You run a construction company. One of your general workers was putting together scaffolding. Your worker accidentally falls from the scaffolding. Your safety harness, which the worker is wearing, has not been properly maintained, and breaks. Your worker plunges 10 metres to the ground below, and ends up permanently paralysed. Your injured worker sues you in court, alleging that you were negligent as an employer in ensuring that all equipment was properly maintained, and that you failed to provide a sufficiently safe work environment. The Courts side with the worker, and award damages of $300,000. Here’s a handy table to summarise what costs Workers Compensation and Employers Liability would pay for, in this example:
| Costs | Workers Compensation | Employers Liability |
| Damages Awarded by the Courts, under Common Law Liability: $300,000 | Covered | Covered |
| Total Costs: $300,000 | $300,000 Covered | $300,000 Covered |
Both Workers Compensation Insurance and Employers Liability Insurance cover common law liabilities. In this example, either policy would protect you from the massive $300,000 costs that you’re liable to pay.
Which Policy Should I Get?
In the examples above, you can see that medical costs are covered only by a Workers Compensation policy. Common law liabilities are covered by both policies.
Viewed this way, Workers Compensation Insurance is essentially just a broader version of Employers Liability Insurance. The premium differences between Workers Compensation and Employers Liability Insurance are insignificant, so it’s best to carry Work Injury Compensation Insurance.
The vast majority of businesses will purchase Workers Compensation over Employers Liability Insurance. Carrying only Employers Liability Insurance is not a common practice. Given the very narrow coverage it provides, this is not a recommended way to protect your business against employment-related liabilities.
Why Is It Important to Insure My Business Against Workers’ Injuries?
In 2021, 22,186 workers suffered work-related injuries in Singapore. Of this large pool of workers, 610 workers suffered major injuries, such as amputations of their limbs. 37 workers tragically lost their lives. Work-related injuries are common. If your employee gets injured due to work, you have to compensate them, and those compensation costs could potentially run into the tens (or hundreds!) of thousands. Such heavy costs could severely impact your business’ financial health. If your employee were to suffer a severe work-related injury, and the resulting compensation ran into the hundreds of thousands, your business could even go bankrupt.
Premiums for Workers Compensation Insurance are very affordable. It’s therefore vital to exchange a relatively small annual premium, in exchange for significant protection against your legal liabilities if one of your workers gets injured, or contracts a disease, due to work.
Where Can I Buy a Workers Compensation Policy?
You can purchase Workers Compensation Insurance on our website, in just 3 minutes!
