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What is Workers' Compensation Insurance?

Workers' compensation insurance is a legally mandated coverage that provides benefits to any worker who either becomes ill or injured while on the job. While there are specific eligibility requirements for employees and exceptions to the federal and state regulations, the insurance coverage takes care of the medical costs associated with the illness or injury as well as covering a portion of the lost wages while the employee is unable to work. This coverage is applicable in qualifying situations regardless of who is at fault. This means coverage applies whether a customer, employee, co-worker, or employer created the incident.

Workers’ Compensation Insurance does not protect employers from claims involving wrongful acts that arise out of points in the employment process, including sexual harassment, discrimination, retaliation, wrongful termination, invasion of privacy, negligent evaluation, deprivation of career advancement, and a variety of others. For coverage on these types of claims, an employer must secure Employment Practices Liability Insurance (EPLI).

Synonyms for Workers' Compensation Insurance
When referring to workers' compensation insurance, you may commonly see the following term used interchangeably. It has a more general connotation, though it assumed that coverage deals with employee injuries.

  • Compensation Insurance: This refers to the medical or wage benefits paid out to those who are injured or who become ill in relation to their job duties. It is used as a protection against civil lawsuits from injured employees seeking restitution for their losses.

 


Learn More About Workers' Compensation Insurance

When do I need to be aware of workers' compensation insurance?

An illness or injury to an employee who was on the job at the time of occurrence can trigger a workers' compensation claim. The insurance policy pays out the expenses associated with treatment or rehabilitation, as well as disability funds or death benefits to families if the employee is killed. Coverage requirements are determined by the state, as well as dictating accepted insurers.

What is important to know about workers' compensation insurance?

Slips, falls, strains, or machinery incidents are common injuries filed on these plans. Rates are determined through a number of factors, though workplace injuries and the loss rating for a business are two primary influencers.

  • Failing to provide coverage with limits required by the state can lead to fines, possible imprisonment, business closure, and paying claims out of pocket.
  • Claims must be approved before employees receive compensation or financial assistance.
  • Not all companies are required to carry workers compensation coverage, nor are all employees eligible for enrollment.
  • In Texas, private employers may choose to carry workers’ compensation insurance, but it is not required.
  • Stop gap coverage, which protects an employer if an employee sues for amounts beyond what workers’ compensation covers, is required in monopolistic states that do not offer employment practices liability insurance (EPLI),which are currently the four states of North Dakota, Ohio, Washington and Wyoming.