Workers’ compensation insurance or workers’ comp insurance is a type of insurance providing medical benefits and wage replacement to workers injured in the workplace in exchange for compulsory surrender of the worker’s right to file a lawsuit against his or her former employer for the particular tort of negligence. This insurance provides all the workers, their dependents and beneficiaries with financially adequate compensation for injuries sustained while at work. Workers’ comp insurance helps the injured workers get rehabilitation, physiotherapy, alternative courses of treatment and care and psychological support. In addition to these benefits, the insurance also helps the employers manage their financial losses by reducing their tax bills and minimising their employee’s unemployment benefits claims. The aim of workers’ comp plans is to provide long-term healthcare and rehabilitation services to workers who have suffered occupational injuries and become permanently disabled due to such injuries. They are typically purchased by businesses on behalf of their employees.
Workers’ compensation insurance is required by all states in US. A worker can claim his compensation from three different levels of injuries. The level of compensation depends upon the nature of the injury, the duration of the workers’ illness or injury and the amount of medical care that had to be administered to the injured individual. Each state establishes its own laws pertaining to workers’ compensation insurance and each state has got separate laws governing the same. Apart from the above-mentioned three levels of injuries, states may also provide additional benefits like provision for personal assistance, payment of retraining expenses, partial loss of earning capacity, etc.
Under laws of most states, all employers who employ more than two workers are liable for providing workers compensation insurance. In addition to this, workers’ comp plans may be purchased by business owners as an add-on to their regular insurance policies. Business owners can purchase workers compensation insurance plans even when they do not employ employees. As an owner of a business, you are responsible for your employee’s welfare. You cannot take the responsibility of their health and safety – that is the task of employers.
When an employee has been injured at work, the employer should take immediate action. However, employers must first take into consideration the rules and regulations of his own state. If such laws conflict with those of his state, both the laws should be aligned to ensure compliance. Employers must inform their employees about the hazards in the workplace, which could lead to compensation claims. Employees should not be hesitant to report instances of unsafe working conditions.
If an independent contractor or subcontractor has been injured at work, it could lead to trouble for the business owner if the contractor is from another state and was not aware of state laws regarding workers’ compensation insurance. Most business owners hire independent contractors or sub-contractors from out-of-state suppliers. While this is a convenient way of doing business, employers could be held responsible if their independent contractor or sub-contractor is injured while at work. If this were the case, the business owner could be held liable for medical and other expenses that resulted from the injury.
To avoid liability, independent contractors and subcontractors should carry workers’ compensation insurance. It is not only required by law; it is also the best way to protect business assets. Workers’ comp policies vary greatly among insurers, and they can be expensive. An insurer may cover only one worker, or group of workers, while another company may offer two, or even five, different types of coverage. This variation could mean a substantial difference in the price of the workers comp policy.
Some insurers prefer to work with workers who already have a small business structure. The advantage of this arrangement is that the business owner does not need to take on additional insurance policies. He will be assigned a risk plan by his insurer, which will include one of the most standard packages. However, because the business owner is already involved with an established business, he may be assigned more expensive packages. If a worker develops an illness or injury while employed with the business, the insurer may require him to change companies if he wants to continue coverage under the same policy. This means he must move his employees’ dental plans to a new insurer.
Because so many states have established large groups of employees, it is sometimes necessary to provide benefits to the entire group, rather than just individual employees. For this purpose, it is often necessary to contract with an employer’s underwriter. To find a reputable insurer, the agent or broker should ask many questions about the insurer’s underwriting policies, premiums and benefits, and potential employers’ coverage laws.