Understanding Workers Compensation Insurance

This type of insurance covers your employees when one of them becomes ill or injured on the job, regardless of who’s fault it was. Employees can receive reimbursement for medical costs, as well as collect a portion of their wages while out of work due to a work-related injury or illness. This coverage is important if an employee is injured in a work-related accident, as they won’t have to pay for their medical expenses out of their own pocket.

In addition to an employee’s medical bills and wage compensation, Workers Compensation Insurance almost always provides death benefits to the dependents of employees who are killed in work-related accidents or illnesses. In some states, laws also limit the amount an injured employee can recover from an employer, and eliminate the liability of co-workers in most accidents, protecting both employers and fellow workers.

Getting Into the Details…

Workers Compensation Insurance covers injuries that are sustained in the actual workplace, or anywhere the employee is acting in the “course and scope” of employment. In addition to accidents, many of these policies cover injuries or disabilities employees may sustain from events that occur while they are at work.

Depending on state statutes, this insurance will also cover certain illnesses and occupational diseases that employees suffer from due to their employment. In some cases, workers will be compensated for the effects of psychological stress caused by their job.

The legal definition of a work-related injury has expanded significantly in recent years. For example, employees who have been injured while playing on company-sponsored sports teams have been able to collect benefits.

What Does Workers Compensation Insurance Not Cover?

While it generally covers any injuries or illnesses that develop on the job, there are some exceptions. Workers may not be covered in these cases in some or all states:

  • Self-inflicted injuries
  • Injuries incurred while not on the job
  • Injuries incurred as a result of conduct or actions that violate company policy
  • Injuries that happen while an employee is committing a crime.

This insurance only covers injuries that happen on the job, so anything that happens to employees when they are off the clock or not performing official duties likely won’t fall under this policy. For example, if a employee is injured during their personal time, such as during a gym session or over the weekend when they’re not required to be working, they won’t be covered.

While some employees have argued to expand coverage because they are always working or thinking about work, courts have enforced common sense limits. For example, if your employee falls out of bed because they are having a work-related nightmare, their injuries will not be covered.

Workers Compensation Insurance covers injuries or illnesses until they become permanent and stationary. Then, employees may be entitled to permanent disability benefits and lifetime medical care.

General damages for pain and suffering, and punitive damages for employer negligence, are generally not available under this type of insurance claim. Negligence is generally not an issue in these cases.

Workers Compensation laws are designed to give employers immunity from liability above the amount provided by their policies. However, in some states, an employer can still be held liable for greater amounts if the claimant can prove they recklessly or intentionally caused them injury, harm or illness. In other states, while employers might be immune, third parties like subcontractors or machinery manufacturers may face liability.

It’s also important to note that Workers Compensation and State Disability Benefits are not the same things. State Disability Benefits are paid weekly when an employee is injured outside of work, but their injury prevents them from performing their work duties.