When employees come to work, they can expect to be in a safe environment. But sometimes despite an employers' best efforts, unexpected injury or illness can happen. When something does happen, employers can rely on workers' compensation insurance to protect them and the employees. Workers' compensation or workers' comp is an important part of running a business and protecting workers and companies. But how does workers' compensation work?
Read on to learn more about how workers' comp works from Acrisure. We provide expert knowledge on all types of insurance and will guide you through the ins and outs of workers' comp.
What Is Workers' Compensation?
Workers' compensation insurance or workers' comp provides financial and medical benefits to an employee who is sick or injured from a work-related accident or illness. This insurance pays for their medical bills and lost wages as they recover from the accident or illness. If an employee dies from a work-related accident, workers' comp insurance provides payments for the employee's beneficiaries.
Workers' comp is a "no fault" insurance program. That means that it doesn't matter who was at fault for an incident to determine coverage. Anyone involved - so long as the incident took place as part of the work environment - will receive full workers' comp coverage. To receive coverage, an employee must show that the injury or illness came from their place of employment.
Workers' comp is required by law in most states (all states but Texas and South Dakota) because of the protection it provides and the benefits for both employees and employers. Some states will even require companies to carry this insurance as soon as the first employee is hired. Even if workers' compensation isn't required by law in a state, it is always beneficial to provide coverage.
What Is Covered by Workers' Compensation?
Workers' comp provides coverage for injuries and illnesses sustained from something related to work. These are some of the things a workers' comp program will cover:
- Carpal tunnel
- Back injuries from repetitive movement or lifting heavy objects
- Injury to the lungs from breathing toxic substances
- Slip and falls while at the workplace or doing something for work
- Injuries sustained in a car accident while driving for business
- Severe injuries from things like electrocution that happened while at work or on the job
These are some injuries that workers' comp doesn't cover:
- Injuries sustained while under the influence of alcohol or drugs (proven with blood/alcohol tests
- Self-inflicted injuries
- Injuries sustained while the employee was violating a law or company policy
- Injuries from accidents during the commute to or from work
Who Benefits from Workers' Compensation?Workers' compensation insurance may be required by law, but it is for good reason. Workers' comp provides protection and benefits to both the employees and the employer, so everyone is protected.
Workers' Compensation Benefits for EmployeesA work-related injury or illness can be physically, emotionally, and financially disastrous for an employee. While employers can't always provide for some of the damage, they can provide financial compensation that will help ease the burdens of a work-related injury or illness. These are some of the key benefits of workers' comp for employees:
- Covers paychecks missed due to the injury or illness. Covering these expenses eases much of the burden of missing work to recover
- Covers the medical bills from the injury or illness. Medical bills can be extensive and put extreme strain on an an injured or sick employee and their family, so covering these expenses is a major benefit of workers' comp
- Protects the employee’s job while they recover. Employees can recover without having to worry that they won't be able to return to work when they're recovered
- Provides a beneficiary benefit. If an employee is killed on the job, their family will be provided with a beneficiary benefit that will cover many costs
Workers' Compensation Benefits for Employers
Workers' comp doesn't just protect employees; it protects the employers as well. Essentially, if an employee is injured in a work-related incident, the employer will always be legally responsible for providing compensation. The insurance policy is what makes providing that compensation affordable and possible. These are some of the key benefits of workers' comp for employers:
- Covers compensation for employees. Without the insurance policy covering the compensation, employers would need to cover it out-of-pocket. Medical bills and missed paychecks add up quickly, and employers can struggle to provide these checks without the insurance policy
- Covers legal fees if necessary. If an employee sues the company for the injury or illness they sustained at the company, workers' comp insurance can help cover the employer's legal needs as part of employer's liability insurance. This part of workers' comp could cover legal fees, settlements, and judgements, so the employer doesn’t have to pay out-of-pocket
- Helps companies meet legal requirements. Workers' comp is required by law in most states, so providing it helps a company meet legal requirements
- Protects businesses from lawsuits and going under. A company is less likely to be sued by an employee if the employee is provided workers' comp. In addition, paying for lawsuits or for employee medical bills and paychecks can cause businesses - especially small businesses - to go under due to the financial distress. Protecting employees protects employers
Who Pays for Workers' Comp?
Since both employers and employees benefit from workers' comp insurance, it can be confusing to know who pays for workers' comp. Even though workers' comp does provide major benefits for employees, they aren't required to pay any of the insurance premiums to benefit. Instead, workers' comp insurance is paid for by the employer. The employer pays workers' comp insurance premiums both to adhere with legal requirements and in exchange for the liability protection this insurance program provides.
While workers' comp insurance is beneficial, it should be viewed as a failsafe and only have to be used for extremely rare accidents. Figuring out how to file for workers' comp and all of the complexities can be time consuming to have to do over and over again. Instead, employers should focus on improving workplace safety to reduce the number of workers' comp claims and to keep their employees safe. These are some ways to improve workplace safety:
- Hold regular safety training. Safety training meetings and programs can be a good way to reinforce safety protocols, teach employees how to handle equipment safely, and provide guidance on protecting themselves from repeated motion strain injuries.
- Improve signage. Clear labels and signs can help improve worker safety and prevent injuries.
- Encourage stretch breaks. Having employees stretch and take breaks from repetitive tasks and motions can help prevent some workplace injuries.
- Consult an occupational health expert. If a company is unsure of how to improve safety in a particular area or environment, occupational health experts can be a great resource. They can guide companies to include the right policies and training practices. They can identify high risks for injury and help companies take the right prevention steps.
- Keep the workplace clean. A clean workplace is one where accidents are simply less likely. Cleaning spills and leaks can help prevent slips and falls while avoiding tangled cords can help prevent trips and dangerous electrical accidents.
The Bottom Line
Overall, workers' comp insurance provides coverage for workplace injuries and illnesses. Workers benefit as they will have their medical care and paychecks covered by this policy. Employers also benefit as they will be more protected from legal ramifications, extensive out-of-pocket costs, and potential business losses. Employers pay for this insurance policy, and employers should take care to improve workplace safety as a whole.
Workers' comp insurance is important and valuable. If you want to know how to get workers' comp insurance, Acrisure can help. Request a quote through Acrisure to get started providing workers' comp for your employees and to protect your business.
For additional information, please visit our website at Acrisure.com. Products or services identified herein may not be available in all jurisdictions. The information and descriptions contained herein (a) are not necessarily intended to be complete descriptions of all applicable terms, conditions, and exclusions of the policies referenced, (b) are provided solely for general informational purposes, and (c) should not be viewed as a substitute for legal, regulatory, or other advice on any particular issue or for any particular reason. The advice of a professional should always be obtained before purchasing any insurance product or service, and you should not rely on the information provided herein for the prevention or mitigation of risks or as a full and complete explanation of coverage under any insurance policy. While the information contained herein has been compiled from sources believed to be reliable, no warranty, guarantee, or representation, either expressed or implied, is made as to the correctness or sufficiency of any representation contained herein.
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