Almost every state requires business owners to have workers’ compensation insurance whether you have one employee or thousands. This policy ensures that your employees are adequately compensated in case they get injured while working for you. Your doctor must declare your injury or illness as a maximum medical improvement (MMI) to qualify for a Workers’ compensation claim. Since it’s a requirement, many business owners end up purchasing Workers’ compensation without actually taking their time to understand how it works. The aftermath is confusion and misunderstanding when a worker files a claim. This article discusses all there is to know about Workers’ compensation and what to expect when you file a claim.
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Workers’ compensation insurance definition
Workers’ compensation is a business coverage designed to provide benefits to injured employees who may get sick or injured at the workplace. The coverage includes everything from medication, ambulance rides, and physical therapy. Workers’ compensation also provides rehabilitation, disability, income loss, and death benefits to a worker who is injured or killed while working. It’s essential to note that Workers’ compensation is a no-fault policy. Therefore, there is no back and forth about who caused the accident and how the worker could have avoided getting injured. The policy takes into account the risk level of every employee and the employer’s payroll premiums.
How does it work?
Workers’ compensation benefits are provided regardless of who is at fault. The injured employees do not need to sue their employer to obtain compensation as they are eligible for benefits even if the injury resulted from their own carelessness. For instance, if a chef gets severely burned when frying food in a restaurant, they will receive compensation even if they were not wearing proper protective gear when doing the work. However, there are exceptions where the injured party may not receive compensation based on the state and situation. A worker will not be compensated if:
- The injuries resulted from disobeying or violating the company policy.
- The employee sustained the injuries outside of work
- The injuries were self-inflicted
- The injuries were a result of intoxication
- The injuries were sustained while committing a serious crime.
What does it cover?
Workers’ compensation comes with several benefits to the employees. There are no policy limits, and the insurance company has to pay all the benefits agreed on the Workers’ compensation policy in that state. However, the employer is held accountable for payments made by the insurance company exceeding regular Workers’ compensation. The policy covers:
- Medical expenses: Covers medical bills incurred at the hospital after a work-related injury. The coverage includes medication, emergency, necessary surgeries, emergency room visits, ambulance rides, and hospital admissions.
- Missed income: If an injured party is admitted to the hospital or has to stay home to recuperate, worker compensation replaces the lost revenue for the time they will be away.
- Funeral costs: If the person dies from an injury or accident that happened at the workplace, workers’ compensation can help pay their funeral costs and death benefits to the employee’s beneficiaries.
- Disability: Some injuries are too severe and may lead to temporary or permanent disability. Worker compensation can reimburse the injured employee by paying medical bills and replace the lost income.
- Repetitive injury: Sometimes, an injury can result in other illnesses like trauma and depression, which may take years to heal. Workers’ compensation pays for treatment costs and ongoing care bills.
Who needs workers’ compensation insurance?
Worker compensation is designed to protect both employers and employees. If an employer fails to buy Workers’ compensation for their employees, they can be sued and face the full wrath of the law. The policy protects employers from lawsuits by employees claiming that a worker was injured by the employer’s negligence. It also protects the employer from financial strains if their employees get hurt.