The Basics of Workers’ Compensation Insurance


If you have employees, there is a very good chance you should have workers’ compensation coverage. While every state has different laws, all but one require you to have it if you have staff. Even the one exception state has laws surrounding providing workers compensation. In some states, you need to have workers’ compensation even if you are the only “employee” of your company. Even if it weren’t required by law, it should be considered ethical to provide for your employees.


Workers’ compensation coverage provides funding for employees who get hurt or sick while on the job. This compensation can help pay for medical bills, replace lost wages, and allow workers to focus on healing rather than their finances. The employer must pay for this coverage, and there should be no cost to the employee. In the unfortunate situation where a worker waS to pass away because of their injuries, workers’ compensation would provide death benefits.


This type of coverage protects the worker since they do not have to pay out of pocket for their medical expenses. However, it also protects the employer. You also do not have to pay out of pocket, which can help you avoid costly lawsuits if your employee were to sue.


What Types of Injuries Are Covered?

As long as the employee performed work functions when they got hurt, they will be covered. This is the case whether they are working on or off-site. The exact wording is that they are working in the “course and scope” of their employment. For example, many accidents causing injury are the result of vehicle accidents. Therefore, if an employee is driving for work, they can be covered. This applies whether or not they are using a vehicle owned by the company or if they are using their own car. This does not apply to commuting to or from work, however.


It also does not have to be an accident. Some workers can be injured by violence or terrorist acts. They may also work with dangerous chemicals and suffer burns or other health issues. It should also be noted that fault is not considered regarding workers comp. Therefore, even if the employee caused the accident, they could still get benefits.


What Costs Does Workers Comp Cover?

There are several costs that workers’ compensation may cover if an employee gets injured on the job and has to miss work. For starters, the protection will give the worker a percentage of the wages they would have earned had they not gotten hurt. Coverage also includes medical bills for hospital visits, surgeries, treatments, and medications. It will also cover workers for disability benefits and ongoing care even after they’ve returned to work. If a worker is killed while on the job, their survivors can claim death benefits and compensation for funeral costs. Essentially, a worker can get compensation for any expense related to that injury, illness, or death.


Are There Situations Where an Injured Worker is Not Covered?

While in the vast majority of situations, an injured worker will get compensation, there are scenarios where they would not. For one, getting to and from work does not count. On top of that, if an employee is intoxicated when they get injured, they are not covered. This would still be the case even if the intoxication has nothing to do with the accident. However, this exception can vary by state, so you should check with your state’s workers’ compensation authority. Finally, if the injury is a result of a physical altercation with another employee, then benefits will be denied. Other than these scenarios, any injured worker will be covered.


What Do Employers Have to Pay for Worker’s Compensation?

Workers’ compensation is not something covered under a standard business owner’s policy, so it must be purchased separately. As soon as you make your first hire, you must get a workers comp insurance quote immediately and have the coverage in place before starting their employment duties.


How much you end up paying will depend on several factors. For starters, every industry has a classification code for the type of work they do. This is because some industries are more dangerous than others. For example, a construction worker is more likely to get injured than someone working in an office. Therefore, your premium will be higher or lower depending on a position’s industry classification. Another factor is the location of the workplace. Some locations pose more of a risk for certain natural disasters and even terrorism.


Your premium can also be negotiated down if you have a history or not having to make claims with your insurance provider. This demonstrates that your specific business might be safer than others within your classification. If you tend to make a lot of claims, then your premiums will go up. Your premiums themselves will be a percentage of the salaries that you are paying for your covered employees. This tends to be about $1 for every $100 dollar in payroll.


What Responsibilities Does the Employer Have?

The primary responsibility of the employer is to keep accurate records of any workplace incident. Even if a worker gets a minor injury that doesn’t seem like it will affect their work, you must record it. You never know when something that seemed harmless at the time ends up being a more significant issue. You must also file right away if an employee gets seriously hurt. First, let your insurance provider know, and then let your state’s workers’ compensation board know about the incident. Every state has a deadline for doing this, so make sure that you don’t lose your protection by being tardy.


Submitting the information to the appropriate parties will speed up how quickly your employee gets compensation. They will most likely be stressed and nervous about it, so the faster it can happen, the better. Also, there seems to be a correlation between quick workers comp turnaround times and getting back to work sooner. The more efficient you are, the sooner your employee will get back to being productive for you.


While it might seem like a simple concept, many employees don’t fully understand workers’ compensation or do not realize that they should have it. With this guide, you now have the basics and know what to do if an employee gets injured or sick at work.