GuideOne Brian Gleason
Understanding Workers' Compensation
What is Workers’ Compensation.
Workers’ Compensation, often referred to as work comp, workers’ comp or workman’s comp, is a form of insurance provided and paid for by an employer.
Most businesses or organizations that have employees must carry this insurance for workers who are injured or become ill as a result of performing their job duties.
Employers are responsible for providing a safe workplace and for training their employees about safety procedures designed to keep them safe.
However, no matter how much training or safety awareness is put into place accidents still happen.
Therefore, having workers’ compensation insurance protects both the employee and employer alike.
Having a good workers’ compensation insurance policy in place can help save a business from a devastating loss that is sustained from an injury or death of an employee.
What is Covered by a Workers’ Compensation Policy.
A work comp policy provides for medical care and wages lost due to illness, injury or death of an employee while performing their job duties.
Employers pay for this insurance and may not ask you to pay anything toward the cost.
The benefits are paid by an insurance carrier or by the employer if it insures itself.
Benefits are paid according to the law, and the Workers’ Compensation Board ensures they are correctly provided.
What’s not Covered by a Workers’ Compensation Policy.
If someone is injured while commuting to and from work, the “coming and going rule” typically applies.
This rule states that travel to and from a fixed work site is not considered part of someone’s job duties.
However, someone who drives a company vehicle, and is injured while doing so, will probably be covered by workers’ compensation.
An employee who doesn’t have a fixed work site, or is injured while running a work errand could also be covered under the work comp policy.
Most workplaces at times will offer recreational opportunities for their employees to promote team building and good work environments.
Employees’ can often get injured while participating in activities at these and other social type events provided by the employer.
Certain factors can determine rather or not the injury sustained would be covered by workers comp.
Was the employee required to attend the event?
Did the employer benefit from the attendance of the employee?
Did the activity and injury happen on the employers’ premises during business hours?
If the employee clearly attended the activity voluntarily and completely for their own benefit, any injuries generally will not be covered under workers’ compensation.
However, if injured an employee should always report the injury to the employer and look into the possibility of work comp coverage being provided.
Other situations that could cause an injury not to be covered while at work include:
Using drugs or alcohol.
Purposefully violating or ignoring safety rules.
When a workers’ compensation claim is filed, the insurance provider and or court system will look closely at the details of the injury and events surrounding it to determine if coverage is available.
Who Regulates Workers’ Compensation.
The Workers’ Compensation Board is a state agency that oversees how employers and insurers handle the claims of injured workers.
A claim is paid if the insurer agrees the incident is work-related, or if the board orders it.
An employer or its insurer can dispute the claim. If that happens, the board will try to resolve the dispute within a certain time frame.
What Employers Need to Know About Workers’ Compensation.
Workers’ Compensation laws are in place and governed by each state.
These laws are there to protect both the employer and employees in the case of a work related injury.
In most states, it is mandatory that an employer carry workers’ comp insurance.
Even if coverage is not mandatory for an employer in your state, voluntarily participating in the state's program is usually the wisest course of action to protect your workers and your business.
Worker’ Compensation policies are regulated by the state.
Therefore, coverage and rate requirements will be different from state to state.
The cost of a workers compensation policy is going to vary based upon the number of workers and payroll the business has, the location, the type of work being performed and the claims history of the business.
What’s in a Workers Comp Policy
A workers comp policy will generally contain two parts:
Part A, “Workers’ Compensation” which covers whatever the amounts of compensation required by the state in the event a worker is injured.
Lost income, medical related expenses or in the event of death, benefits to the dependents of the employee.
Unlike other types of insurance polices, with workers comp there is no limit on the policy amount.
The insurance company who holds the policy, in exchange for premiums accepts the responsibility to pay the employers’ obligation as a result of the injury.
Part B of the workers comp policy provides coverage for the employer in the event that they are sued by the employee over work related injuries or illnesses.
This part of the policy has a payout limit that is stated in the policy declaration pages.
Most work related injuries are covered by workers' comp, however, there are a handful of exceptions.
While every state has different workers’ compensation laws, there are some common situations where injuries are considered to fall outside the course and scope of employment.