Answering the Most Common Questions about Workers’ Compensation Insurance
Workers’ Compensation is a form of insurance that exists to attend job concerns for both Employers and Employees. Also known as Workers’ Comp, this benefit helps workers in the case of injuries within the workplace.
In other words, if an employee hurts themselves during workhours, Workers’ Compensation insurance provides the medical expenses and protects the employer form a civil lawsuit. Laws regarding Workers Compensation vary by state and the compensation deliberation is different according to each state. This is the reason why sometimes it is complicated and difficult to track and implement this insurance inside Companies of any size.
At TerraClaim, we have received the same and recurring questions regarding how this system works and what coverage this insurance provides. In this article, you are going to find the most complete guide to understand Workers’ Compensation.
What is Workers Compensation?
According to International Business Magazine Forbes, Worker Compensation (WC) is the coverage provided by employers for the employees to pay for medical expenses, injuries or treatments: “When employees become injured or sick because of their work, Workers’ Compensation insurance pays vital benefits to those employees.” Workers’ compensation benefits include medical treatment and on-going care, payments to cover lost wages and even death benefits.
It is important to notice that almost all states in the United States require Workers’ Compensation with the exception of Texas where it is optional. According to the experts in insurance at the Insurance Information Institute: “Workers’ Compensation systems are established by statutes in each state. State laws and court decisions control the program in that state and no two states have exactly the same laws and regulations.”
Considering that it is a requirement almost everywhere, it is important to know the scope of this insurance coverage and to not confuseit with Disability Insurance. The main difference is that Workers’ Compensation only pays workers who are injured on the job, while disability insurance pays out regardless of when or where the insured is injured. Finally, WC does not cover unemployment and is always tax-free.
What does Workers’ Compensation Insurance cover?
According to Insurer The Hatford “30% of Workers’ Compensation Claims are sprains and strains.” The injures that are covered have to meet at least one of the following requirements:
- It came as a consequence of an action in the workplace that was part of the job of the injured.
- It was caused by any type of violence in the workplace.
- It originated in terrorism.
- It was a consequence of a natural disaster.
When these requirements are meet, the insurance for Workers’ Compensation covers:
- Medical expenses.
- Lost wages (partially).
- Ongoing care costs.
- Expenses in the case of Death.
As you can see, this is a very important consideration to have in mind because not all injuries are covered by Workers’ Compensation Insurance. Let´s review the injuries not covered:
- Done by the employee intentionally.
- Originated in employee negligence.
- Caused by emotional injuries with no physical symptoms.
- Those that happened during the employee’s commute to work or from work.
Finally, keep in mind that Workers’ Compensation injures protects business owners from civil lawsuits but not in the case of:
- Negligence by the employer.
- Malicious intent.
- Wrongful termination.
Now that you understand the basic parameters of how Workers´ Compensation works, remember that because it variates between each state, it is not transferable from state to state.
Who is Required to have Workers’ Compensation?
Basically, all the employees who are not the owners of a business should be covered by Workers’ Compensation.
It is important to highlight that, added to the requirement of Workers’ Compensation, there are premiums to pay. An insurance company will charge premiums according to a “industry classification code” based on the risk of that particular job line. The more dangerous the job, the higher the premiums are. However, there are exceptions on work-lines that do not require a Worker Compensation insurance. These are: Employees on Commision, Part-time Workers and Volunteers.
On the other hand, employees need to establish that their employer has a legal liability to pay compensation. In the event that the employer is insolvent or no longer in existence, compensation can be sought directly from the insurer under the terms of the Third Parties.
In the U.S., workers’ compensation policy is usually handled by the individual states. The U.S. Department of Labor houses an Office of Worker’s Compensation Programs, but it is only responsible for compensation policies for federal employees, longshoremen, and coal miners.
Workers’ Compensation: Insurance to keep workers safe
In conclusion, there are many threats to workers in today’s world. That is why it is important for each business owner to be aware of Workers’ Compensation and to buy coverage for their employees. Keep in mind that a civil lawsuit can put a business to their knees. Remember, what is better for workers is better for business. This form of insurance is a fundamental requirement to ensure protection for all the involved parties.
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