What is Workers Compensation Insurance?

Even though a business takes every precaution to ensure the safety of its employees, accidents still happen. Some are small requiring minor first aid but just one accident that causes long-term medical care could be devastating to both the employee and employer. To cover such possibilities most businesses obtain workers compensation insurance. That insurance provides the employee with the security of knowing they will at least be partially compensated for lost income and medical care after the injury and the employer with peace of mind they will not suffer due to any potential injury related lawsuits.

What does it Cover?

Though workers comp regulations and laws vary from state to state all workers compensation insurance covers these basic things:

  • Injuries sustained on the work premises or anywhere the employee is working for the employer. Therefore, if an employee is killed in a vehicle while carrying out work for their employer, death benefits are covered. However, this does not cover driving to and from work.
  • Injuries sustained by an employee while at work from events other than work related. For example, workers compensation covers injuries caused by a natural disaster to employees in the workplace.
  • Illnesses contracted by an employee at the workplace. Some common claims for coverage here would be things like illness caused to toxic waste or asbestos insulation.

Most state regulations stipulate benefits be paid for the extent of the disability though some set maximum limits to the number of weeks benefits must be paid. Benefit amounts are always set as a percentage of the worker’s weekly wage.

It is important to know that workers compensation insurance is not part of your General Liability coverage or Business Owners Policy. Most businesses are required by law to have Workers Compensation Insurance though there are some exceptions. Because the laws vary from state to state and from one industry to another it is very important to consult with your insurance agent about the requirements for your business. Your agent will work with you in developing employee safety and reporting procedures as well as setting deductibles to make your premiums as manageable as possible.