Workers' Compensation Insurance
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Introduction: Workers' Compensation

Introduction: Workers' Compensation

Workers' Compensation Insurance is a state-mandated insurance policy that protects an employer from the costs related to their employees' work injuries or illnesses. Sometimes known as "Workers' Liability Insurance" or "Workman's Comp," this policy covers the wages and medical expenses of your client's employees if they are hurt on the job. In exchange for Workers' Compensation benefits, your client's employees relinquish the right to sue their employer for negligence.

The Basics of Workers' Compensation Insurance

The Basics of Workers' Compensation Insurance

If your client employs workers, most states require that they purchase Workers' Compensation Insurance. Some states mandate that all companies with W2 employees carry Workers' Comp, while others require it regardless of company size or worker classification. Sole proprietors are often exempt from these mandates, but they may want to purchase a policy to cover their own occupational injuries.

Most Workers' Comp plans include Employers' Liability Insurance. This coverage covers legal expenses when your client's employee claims an injury or illness was caused by their employer's negligence. Workers' Compensation and Employers' Liability differ from General Liability Insurance in that these policies only cover lawsuits brought by employees - not third parties.

What Workers' Compensation Doesn't Cover

What Workers' Compensation Covers

Workers' Compensation covers your client's employees' injuries whether they happen at the office or while traveling for business. Some injuries are sudden (e.g., fall from a ladder). Others develop over time (e.g., repetitive motion injuries such as carpal tunnel syndrome). Work illnesses could also arise from continuous exposure to chemicals or be the result of working conditions (e.g., heart disease or stress-related digestive issues).

In addition to the coverage mandated by the state, Workers' Compensation policies might include coverage for...

  • Your client's employees in other states.
  • Certain types of illnesses and injuries above and beyond the state mandate.
  • Funeral costs and support payment to dependents when an employee is fatally injured or ill.
  • Your client's employees' replacement wages.
  • Certain liabilities
  • .
How Workers' Compensation Benefits Work

How Workers' Compensation Benefits Work

Because Workers' Compensation is regulated by the state, the benefits may vary. Some take the form of..

  • Weekly payments in place of employee wages.
  • Compensation for past or future economic loss.
  • Reimbursement for medical expenses.
  • Payments to an employee's dependents after a fatal workplace accident.