Why is Workers’ Compensation Insurance Important?
- February 25, 2023
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IN THIS BLOG
Advantages of Workers’ Compensation Insurance
DO I NEED WORKERS’ COMPENSATION INSURANCE?
HOW WORKER’S COMPENSATION INSURANCE WORKS
WORKERS’ COMPENSATION INSURANCE COVERAGE
What Workers’ Compensation Insurance Doesn’t Cover
One question many business owners ask is “do I need workers’ compensation insurance”? The answer is yes. Every state in the United States requires workers’ compensation insurance coverage except for Texas. Businesses that fail to provide workers’ compensation coverage will result in your business paying for the benefits out of pocket as well as civil or criminal penalties.
It’s critical to have workers’ compensation insurance if you’re establishing a business or expanding your current firm. Having an employee increases the potential for accidents and injuries, which raises your risk of litigation in the future. In the case of an accident, obtaining workers’ comp insurance ensures that both your employees and your company are protected. It is, after all, a wise move to cover your firm and your employees in the event of an on-the-job mishap.
Advantages of Workers’ Compensation Insurance
Employees who obtain injury or get ill “in the course and scope” of their job are under workers’ compensation coverage, which is a state-mandated insurance policy that offers medical benefits and pays for replacement.
Employers, coworkers, and even customers are all covered regardless of who is to blame for the employee’s actions. Workers’ comp insurance, while it may appear to be simply another business cost, protects business owners from lawsuits due to workplace circumstances that can lead to injury or illness.
How Does Workers’ Compensation Insurance Work?
You may be eligible for workers’ compensation if you become ill or injured at work. Based on the employee’s field of work and the rate assigned to each employee classification, the monthly premiums for coverage are different. The minimum and maximum weekly rate benefits, as well as how to compute them for an injured employee, are determined by state regulations.
This only applies if your employees sustain injuries at work, or if they become sick. Depending on state laws, sick employees may be paid a portion of their salary while they are off work to cover the cost of treatment for their illness. Workers’ compensation may include vocational rehabilitation, compensation for permanent injuries, and survivors’ benefits.
After a Personal Injury or Illness, Business Owners and Employees should Take the Following Steps
- Make an appointment with a doctor.
- Initiate the claim procedure.
- File the claim.
- Receive benefits.
Workers’ Compensation Insurance Coverage
If you suffer a work-related accident, workers’ compensation insurance (also known as workman’s compensation) can help you recover. The list below entails the coverage for workers’ compensation insurance.
A. MEDICAL EXPENSES
When an accident happens at a workplace, workers’ compensation provides coverage to help your employee pay for medical expenses. This can include emergency room visits, surgical procedures, medications, hospital stays, and other medical bills. Ongoing care, such as therapeutic care is also part of the coverage.
B. MISSED WAGES DURING RECOVERY
A serious injury can prevent an employee from returning to work. Workers’ compensation insurance provides lost wage reimbursement, within limits, for employees who have to miss work because of an occupational injury or illness. The amount that you receive, and how much you receive, depends on the degree to which your injury affects your ability to work. If an injury keeps an employee out of work, then they may qualify for lost income benefits if they fall into one of the following categories of disability:
- Temporary total disability – benefits are paid during the period of time the employee is completely unable to work on a temporary basis due to the injury.
- Temporary partial disability – Covers an injured employee if they return to work but unable to earn them as much as they were earning prior to their injury.
- Permanent total disability – Covers an injured worker who permanently and totally lost their ability to work and earn after an injury.
- Permanent partial disability – Provides benefits to an employee that has permanent impairment because of work injury which makes him/her unable to perform at his/her full capacity.
C. VOCATIONAL REHABILITATION BENEFITS
If you’re unable to do your past job because of your medical restrictions, you have the legal right to vocational rehabilitation if you suffer an injury at work. Workers’ compensation insurance covers an injured employee’s rehabilitation in order to regain the full capacity to return to their job. Vocational rehabilitation benefits may include services such as occupational counseling, on-the-job training, and vocational retraining at an accredited learning institution.
D. DEATH BENEFITS
If work-related injury or illness results in an employee’s death, “death benefits” pays for related expenses. This benefit expands a restricted amount towards memorial service costs in addition to a weekly advantage to qualified dependents.
What Workers’ Compensation Insurance Doesn’t Cover
Typically, an injury that is work-related will be covered under workers’ compensation litigation. However, there are a few specific situations where injuries are not covered by workers’ compensation.
- Injuries on the job
- Stress-related injuries if the job was a main contributing factor
- Occupational illnesses from workplace hazards like chemicals
- Business travel including deliveries, sales calls or meetings
- Business events like company parties or outings
- Covered natural disasters or terrorism while employees are working
- Death benefits for dependent family members for a percentage of the employee’s wages and some funeral benefits
