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A Complete Guide to Workers' Compensation Insurance

According to data, for every 100 full-time workers, 3.4 worker compensation claims are filed annually. Workers are not immune to workplace injuries that can affect their future livelihoods and cost your business a lot of money in lawsuits and claims.

Worker's compensation insurance protects your business from claims resulting from injury to workers within your premises. These include injuries resulting from terrorism, violence, and natural disasters.

Here's a complete look into worker's compensation insurance, what it entails, and why your business should have it.

What is Worker's Compensation Insurance?

Worker's compensation insurance provides wage and medical benefits to employees injured or ill on duty. This insurance coverage is mandated across each state. However, the details about the wage and medical benefits vary across states.

Worker's compensation is purchased by businesses and underwritten by insurance companies or publicly supported state funds in some states.

Worker's compensation insurance covers lost wages, medical expenses, and rehabilitation costs for employees who become ill or injured in the course and scope of their job. It also pays death benefits to families of employees killed in the line of duty.

How Worker's Compensation Insurance Works

Worker's compensation insurance is often considered social insurance since it relies on a social contract between labor and management. In exchange for purchasing worker's compensation insurance for the laborers, the management and business owners are protected from civil lawsuits from employees injured at work.

To get the benefits, the ill or injured employee must file a worker's compensation claim with their employer, detailing the illness or accident. The employer must provide the employee with a worker's compensation claim form within one working day of the incident. The form varies across states.

Both parties must fill out their respective sections in the claim form before submitting it to the insurance company for review. Depending on the state, the insurance company may or may not be mandated to cover the expenses while determining the claim's validity.

If your business lacks worker's compensation insurance, it must cover the employee's medical costs out of pocket.

What Is Covered by Worker's Compensation Insurance?

Worker's compensation typically covers medical care, survivor benefits, disability and lost wages, rehabilitation, and physical therapy.

As with all other insurance coverages, the exact coverage offered varies across insurers and businesses. The coverage also depends on the severity of the workplace illness or injury.

Here's a breakdown of the most common coverages:

Medical Care

Worker's compensation insurance covers the immediate costs of medical care, including any subsequent doctor visits, surgeries, and medical equipment needed by the injured or ill employee.

Survivor Benefits

Worker's compensation pays some of the lost expected wages and funeral expenses to the family of an employee who's died due to a work-related accident or injury.

Disability and Lost Wages

If an employee has to miss work due to a work-related illness or injury, worker's compensation insurance pays for their disability payments and lost wages.

Rehabilitation and Physical Therapy

Worker's compensation pays for rehabilitation or physical therapy costs for an employee with a work-related illness or injury.

The Type of Injuries Covered by Worker's Compensation Insurance

Sprains and strains are the most common work-related injuries covered by worker's compensation insurance. Data shows that about 30% of worker's compensation claims result from these injuries.

Sprains and strains commonly happen while lifting something heavy. These injuries typically take about 12 days to recuperate before the employee can resume work. Some of the most common jobs and activities that can cause sprains and strains include:

  • Freight

  • Labor

  • Material moving

  • Stock

  • Nursing assistants

The second most common types of injuries include falls, slips, and trips. The same data shows that they make up 27% of total worker's compensation cases.

Work-related injuries covered by worker's compensation can also result from terrorism, violence, and natural disasters. Work-related illnesses can result from various elements at work, such as chemicals.

What Isn't Covered by Worker's Compensation Insurance?

Worker's compensation insurance typically doesn't cover the following:

  • Illnesses resulting from food brought by the employee from home or cooked by them

  • Injuries incurred under the influence of drugs or alcohol

  • Injuries or illnesses incurred during a recreational or company wellness program

  • Injuries incurred during a commute to and from work

The Role of the State in Worker's Compensation Insurance

Each state has a unique worker's compensation insurance law. Despite some similarities, you must know your state's requirements for compliance.

For instance, the law in California mandates every person or apprentice working for an organization to have worker's compensation insurance. This includes employees with written or oral agreements and lawfully or unlawfully employed workers.

However, California doesn't mandate children or spouses to have coverage. Worker's compensation insurance is also not mandated for the following employees in California:

  • Volunteers

  • Deputy sheriffs

  • People working in exchange for food or aid

  • Amateur sports officials

Florida requires every employee working for another firm, person, group, or corporation to have worker's compensation. These employees can be under any type of contract, including implied ones.

Florida law also includes lawfully and unlawfully employed immigrants and minors. However, the following employees in Florida are not mandated to have worker's comp:

  • Musical theater performers

  • Licensed real estate brokers

  • Independent contractors, except construction workers

  • Temporary workers

Under Florida law, worker's compensation for sports officials, volunteers, chauffeurs, and other drivers is loosely defined.

Variations are extensive across states. Therefore, consult your insurer on an insurance agent on the type of coverage your business needs to comply with a specific state's law.

Benefits of Worker's Compensation Insurance

Worker's compensation insurance packs the following perks:

Compliance with State Regulations

Getting worker's compensation ensures you comply with each state's unique requirements and regulations for worker's compensation insurance. Otherwise, you'll be charged heavy fines.

Provides Medical Care for Injured or Ill Employees

Worker's compensation allows your business to care for injured or ill employees by paying for the necessary medical care to recover from a work-related injury or illness.

Protects Your Business Financially

Medical expenses to treat an injured or ill employee can be very expensive. Worker's compensation insurance helps you avoid these expensive costs by having the insurer take care of them, thus protecting your business financially.

Find a Trusted Carrier for Your Worker's Compensation Insurance

Worker's compensation insurance should not be treated as a mere regulatory requirement. Instead, it's necessary to ensure your business can help its employees and their families recover in case of a work-related illness or injury. Contact a trusted carrier today and choose the best policy for your business.


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