Understanding Workers Compensation Insurance

In protecting both employer and employee in the workplace, workers compensation insurance plays a pivotal role. Previously seen as a necessary evil, workers’ compensation now plays a key role in reducing litigation fees of companies and securing more protection for both parties in the event of an accident. The follow are guidelines and information on how workers’ compensation functions.

The majority of businesses out today should consider attaining workers compensation insurance. Not only does it build a sense of loyalty and trust between employer and employee, it also protects both parties if an accident occurs. Employees who are hurt on the job usually expect to be aided financially as they recover from an injury. In the litigious society that we live in today, numerous lawsuits have come as a result of employees that felt their employer acted in negligence and refused to acknowledge the incident on the site. Workers compensation insurance, commonly referred to as workers comp, is there to help both parties in situations like these. Most states actually require that employers have this insurance available to their workers.

Although many people have heard of workers’ compensation insurance, most do not know exactly what it entails. This type of insurance is designed to pay workers who have suffered an accident at work as well as payout wages as they recover. It also pays for the expenses for treatment of those injuries. Workers compensation insurance also protects the employer against lawsuits by the employee, as it is not allowed under this insurance. Should an employee be injured at work, there are forms that both parties need to fill out as soon as possible as workers’ comp is time-sensitive.

An employee that files for workers’ comp can make a claim for injuries that resulted from the work accident and receive wages for a certain time frame. If the employee dies on the job, their dependents or other family members are eligible for burial expenses.

Workers’ compensation insurance is not available for every type of injury sustained at the workplace. Self-inflicted injuries or those under the influence of drugs or alcohol, for example, are not covered under this insurance. Natural disasters such as flooding, earthquakes are also not under this plan. And if it is determined that another employee caused the injuries, workers’ compensation does not cover those either. It is important to remember that workers’ compensation only covers those injuries directly caused as a result of the injury. Emotional distress or other types of punitive damages are not paid for under this type of insurance. Also worth noting is that the workers’ compensation benefits can be reduced if the employee in question failed to comply with safety regulations on site.

Depending on the type of business, insurance rates can vary greatly. Employers must pay all costs associated with workers’ compensation insurance and cannot hold the employees responsible for this in any way. A company can use the option of raising their deductible to offset the costs of workers’ compensation insurance. This takes some of the financial stress off the insurance company.

Most companies are mandated by state law to have workers’ compensation insurance for their employees, but there are slight variations from state to state. In California, for example, this insurance is required even if there is only one employee on staff to receive the benefits. In Alabama, however, the minimum necessary for insurance coverage is at least four employees. It is advisable to find out through your state’s department of insurance if your company is mandated to have workers’ compensation insurance. There usually are companies that provide for the state already.