Workers Compensation Insurance, often known as workers comp, is an insurance policy that covers the cost of health care for employees injured or sick on the job, as well as some lost wages. If the employee is not acting within the scope of his employment and is injured, like playing soccer with friends on his days off, workers compensation insurance does not cover him.
For instance, if a heavy beam falls onto the construction workers leg and causes a compound fracture, workers compensation may cover the cost of treatment and lost wages while recovering. For example, a construction worker may seek compensation if scaffolding falls on his or her head, but he or she cannot if they are involved in a car accident on their way to work.
Nearly all states require employers to carry insurance that covers the cost of health care and lost wages of workers injured or sick on the job. Exempt employers who choose to either not buy workers compensation insurance or to self-insure are still subject to civil suits brought by employees injured during their employment. Employers who do not have the required number of employees, or have employees who fall into an exempt category, can choose to opt into the law and purchase workers compensation insurance.
Employers who do provide insurance are protected from lawsuits filed by injured workers. Businesses who do not provide workers compensation insurance coverage could face serious, expensive consequences, including paying claims out-of-pocket, fines, and possibly jail time, and could lose their ability to do business in the state. Workers generally waive additional rights in exchange for guaranteed compensation, and employers agree to some level of liability, avoiding the potentially greater harms of large-scale negligence suits.
This compensation bargain is intended to protect both workers and employers. This system gives business owners significant control over the cost of their workers compensation insurance premiums: safer businesses are rewarded with lower premiums, while unsafe businesses are punished by higher premiums. The workers compensation system was created to make sure workers are taken care of in case of injury while protecting business owners from substantial financial losses following a crash.
Workers Compensation is a crucial component of your small business insurance package, protecting both you and your employees from financial loss. Keep in mind, workers compensation coverage not only protects your employees, it also protects your small business. Even if you are an individual, you might consider getting workers compensation insurance for business owners.
While workers compensation laws differ from state to state, it is common for small businesses to want to have a policy as soon as they hire their first employees. An employee receiving benefits, however, may file suit against you for things not covered by the workers compensation part of your policy. To find out whether your workers should be covered, visit Independent Contractors for more information.
To help expedite the delivery of health care to an injured worker, some insurance companies are helping employers file an initial notice of injuries promptly with the state agency that regulates the workers compensation system, a step that can start the claims process.