Workers’ Compensation Insurance (workers comp) is designed to protect workers from the expenses associated with workplace injuries or illness. Typically the coverage requirements and rates are set by each state where business is conducted.
In most cases, the injured employee will receive benefits no matter who is at fault for the injury or illness as long as it is found to be job-related. There are two distinct advantages for providing workers’ compensation even if not required by your state’s Department of Labor:
- Your employee’s medical expenses and lost wages will be paid by the insurance carrier up to the limits of your policy.
- Your employees will not be allowed to sue your business for injury or illness expenses since you are providing workers’ compensation coverage at no charge to them.
Although most employers and employees are aware of the need for workers’ comp, many are not aware of the specifics of the coverage provided.
What Types of Incidents are Covered?
The coverage is designed to pay for medical expenses associated with an employee’s job-related injury or illness no matter who is at fault unless excluded by the policy.
What Types of Expenses are Covered?
Unless specifically excluded, the workers comp policy will pay for the following expenses:
- Medical expenses associated with a job-related injury or illness.
- Replacement of lost income associated with a covered injury or illness.
- Costs for retraining that result when a job change is needed.
- Compensation for permanent injuries that result in disability.
- Financial help for survivors of workers who are killed on the job.
What Types of Incidents are Not Covered?
Although work-related injuries and illnesses are typically covered, there are certain instances when a claim may be denied:
- When an employee is found to be under the influence of drugs or alcohol at the time of an injury.
- If an injury or illness is found to be self-inflicted.
- When an injury or illness is found not to be work-related.
How Much is Paid for Lost Income?
The typical amount paid for lost wages is two-thirds of the employee’s average wage, but depending on your state, there is a maximum amount that is available. It’s important to note that workers comp benefits are not taxable, so the amount received is likely to be very close to the employee’s average net weekly paycheck.
How Will I Know Who Must be Covered?
In most states, any business with at least one employee is required to carry workers comp, but there are some exceptions depending on the state you are working in. You can click here to find a list of states and their workers comp requirements. Each state typically requires the employer to post a conspicuous notice in their business detailing who their workers comp insurance carrier is, their contact information, and instructions for filing a claim.
Do I have to Cover Part –Time Employee?
Yes. Part-time employees must be covered as long as they work regularly. For example, a part-time employee that only works on weekends must be covered under the employer’s workers comp policy.
What about Independent Contractors?
Independent contractors are considered self-employed and therefore should purchase their own workers comp insurance policy. You are responsible for making certain they have coverage by requiring a verified certificate from their broker or insurance carrier. If you have paid independent contractors for work and cannot prove they were insured at the time they provided services to you, your workers comp insurer can charge you for the premium required to cover them with your regular employees.