What is Workers Compensation Insurance?

If you are injured on the job you will require compensation for lost wages and medical bills. But who do you go to for compensation? Before workers compensation laws were enacted employees would have to sue the employer and prove that they were at fault or negligent. This did not help either party and would leave someone with a huge financial loss. After many years of passing laws and countless court cases each state in the union now has some form of compulsory workers compensation law requiring every business with employees to have a worker’s compensation insurance policy in force. This gives every employee the right to medical benefits and wage replacement in case of injury, while relinquishing their right to sue the employer.

How does workers compensation work?
When a business purchases workers compensation insurance they are paying an annual premium for a injury or illness benefit. Workers Comp provides payments for medic bills and lost wages to employees who are hurt on the job and may not return. To receive medical payments and wage replacement a claim must be filed. After treatment is administered the employee needs to contact the employer and file a claim with the insurance carrier. This is the only way benefits can be given out to the employees. A claim will trigger the insurance carrier to review the claim and determine if the policy benefits apply. The insurance carrier will do a thorough investigation reviewing the injury, talking to witnesses and contacting the employer. They are trying to determine if the injury was work related and covered by the insurance. They will investigate the seriousness of the injury the ability of the employee to continue to work. These factors will decide the amount of wage replacement the employee can receive. Please refer to your states workers compensation laws for more details.

For the Employee
The employee is guaranteed the right to medical payments and wage replacement if they are injured or become ill on the job. If injured, workers’ compensation has medical benefits to pay for reasonable medical treatment, prescriptions and hospitalization services related to the work injury. There are different medical benefits for different types of injury. There are temporary total disability benefits, permanent partial benefits, permanent total benefit, and death benefits. These benefits are to help the employee while out of work for an extended period of time usually more than 7 days. Providing wage replacement (generally two-thirds of their wages are paid) and medical payments.

For the Employer
Workers compensation protects the employer from law suit by their employees, with an active workers compensation policy, employees relinquishing their right to sue the employer. This gives the employee confidence that the employer is taking care of them if an injury occurs. Every state has workers compensation laws that the employers need to follow. Compulsory workers compensation law makes it mandatory to provide workers comp or face a penalty from the state. These penalties can be expensive so avoid them and contact your local agent to find out more about the state specific workers compensation law.

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Dan Levenson

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