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  • How Does Workers' Compensation Insurance Work?

With workplace injuries costing employers $225.8 billion annually, workers compensation is of the essence.

As a business owner, a workers comp cover will save you a lot of trouble. However, it's vital to note that workers compensation is a deep subject with quite many nuances to be aware of. Learn more with this in-depth guide on worker's comp.

What Is Workers Compensation Insurance?

Workers compensation insurance simply refers to a cover aimed at ensuring employees receive their rightful benefits after they suffer a work-related injury or illness.

It’s a state-mandated insurance program that pays monetary benefits to workers injured in the course of employment. As a way to ensure fairness, workers often receive these benefits and in return, they relinquish their rights to sue their employer.

History Of Workers Comp

Before workers comp, the only legal option for employees was to sue their employers. Most of them often ended up not taking any action as this would result in a lengthy, expensive back and forth process which yielded no results.

The majority of these cases would often end on the basis of contributory negligence, meaning that all blame would be on the employee. As a way to ensure justice is served, the United States adopted workers compensation laws back in the 1900s.

These laws created a no-fault system, making it possible for employees to receive compensation without having to prove liability. Thanks to these laws, employees no longer have to prove negligence to be compensated for damages.

On the other hand, the employer benefits from the cover as the injured employees cannot sue them. In a nutshell, workers comp insurance works towards protecting both the employer and employee.

It covers any medical expenses or damages that the employee might have incurred due to a work-related injury or illness. It also includes the employer by protecting them from lawsuits as well as covering the expenses associated with the staff's injury or disease.

At times, it may also cover legal costs.

Who Pays For Workers Comp?

Now that you know how the program works, who is expected to pay for it? Well, even though employees are the bigger beneficiaries of workers comp, the employer is often the one who pays for it.

However, being a state-run program, the requirements on compensation vary depending on the business’s location. For instance, in Nevada, employers with one or more employees are required to offer coverage to employers who work 20 days and earn more than $500 only.

This means that casual workers are excluded. In other states, the rules are different.

For instance, in Massachusetts, employers are required to offer coverage to all employees regardless of the number of days they work. As an employer, ensure you consult a skilled workers comp insurance agent to understand how things in your state work to avoid rude surprises.

How Does Workers Compensation Work?

As noted above, the program covers costs are associated with work-related injuries. Therefore, when an employee is injured, they’re supposed to report the injury to the employer or the HR team within a specified period. The team responsible in turn starts the claim process.

For instance, if you're the employer, you're supposed to provide the appropriate forms and then start the process by filing the claim with your state's workers compensation agency. This agency often processes the claim by informing your insurer and requesting for the benefits in question. Other than the compensation agency, employers are also required to report about the incident to OSHA.

Once the claim is approved, the injured employee begins receiving the benefits while recovering. Once they’re fully recuperated and ready to work again, they can resume work.

Injuries And Illnesses Covered By Workers Compensation

Only work-related injuries or illnesses are compensable. This means you can report an injury as long as it happened while you are within the workplace or while you were engaged in work-related activities.

For instance, if an employee happens to be involved in an accident while carrying out work-deliveries, then they’re entitled to workers comp benefits.

When it comes to illnesses, workers comp covers employees who got a particular ailment due to continued exposure to certain chemicals while at work. Some of the most commonly compensated injuries include:

  • Slip and fall injuries
  • Carpal tunnel due to spending too many hours hunched over a computer
  • Lung cancer due to continued exposure to toxic substances
  • Occupational illnesses such as asthma and bronchitis

 

What Isn’t Covered?

Based on the above, it's clear that not all injuries or ailments are covered. To put it simply, you're not required to start the compensation process if the incident is not work-related.

For instance, if you and your employee decide to hang out after work, and during this time he/she slips and falls, this isn’t considered as work-related. Therefore, you aren't supposed to offer any compensation.

If a worker is injured while violating a company policy, no compensation can be offered as well. Additionally, if the incident takes place while they’re at work but under the influence of any drug, then it’s also upon them.

Benefits of Workers Comp to Your Business

When you take out a workers compensation cover, it not only serves your employees but also benefits you and your business greatly. Here are some of the top benefits you enjoy:

Protects You from Liability

The moment an employer covers a workers comp contract, they automatically protect themselves from future lawsuits.

This is because as noted earlier, workers comp is a no-fault system. Hence, in case of an injury in the future, your employee can’t sue you regardless of the circumstances surrounding the incident.

Covers Some Vocational Rehabilitation Expenses

Another benefit is that at times, it covers costs associated with training a new employee. This happens when the ill or injured employee can’t continue offering their services. This goes a long way in ensuring business continuity, thus preventing loss of profits.

Keeps You on the Safe Side of the Law

Purchasing workers compensation insurance isn’t an option but a legal requirement. When you do your part, you’re on the safe side of the law. This gives you peace of mind knowing that no matter what, your employees are covered.

Protect Your Business Through Workers Compensation Today!

While you may take measures to reduce injuries, no workplace is entirely risk-free! Therefore, ensure you’re on the safe side by getting workers compensation. Also, visit us to learn more about this great cover.