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Get to Know Insurance: Workers' Compensation Insurance

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Welcome back to Get to Know Insurance! This week we will be covering a very important part of business insurance that every business must have, workers compensation insurance. As we work our way through 2018 we would like to focus on types of insurance that can directly benefit businesses and nonprofit organizations so, if you’re a business owner or on the board of a nonprofit, let us know if there’s anything in particular you would like more information about!

Workers compensation insurance is another form of insurance that is required by law, along with auto insurance, so it’s important to have a good understanding of it rather than just buy the cheapest policy because you have to have it. In a previous blog post we’ve explained how that can come back to haunt you when buying auto insurance and we’ll do so again here.

There is a lot to be said about comparing price and value. We completely understand that price is always a big factor, businesses have budgets and the burden of not adhering to those budgets usually falls on the business owner. However, the responsibility of paying for damages or an injury that, for whatever reason, isn’t covered by insurance is also up to the business owner and it is usually much more expensive than the difference between a bare policy and an adequate one.

A quick definition of workers compensation insurance is a type of insurance purchased by employers for the coverage of employment related injuries and illnesses. It is like auto insurance in that it’s required by law and each state has its own laws dictating the requirements. Each state also has its own workers compensation program where brokers in that state can help businesses purchase a policy. In Idaho we have the Idaho State Insurance Fund.

Workers compensation insurance can also be purchased through an insurance company so it’s important to work with an agent or broker to purchase your policy, so they can take the time to learn about your business or organization and help you find a policy that provides value, rather than just the least expensive policy you can find.

Workers compensation insurance is designed to cover injuries that result from employees’ or employers’ accidents resulting from carelessness, a lack of training or any other reasoning that could lead to an accident. The benefits of workers compensation are numerous, first it protects both the employer as well as the employee. The employer is protected from lawsuits resulting from workplace injuries and the employee is protected from medical costs and missed wages resulting from workplace accidents.

The types of expenses covered by workers compensation are; medical care, replacement income, costs for retraining, compensation for any permanent injuries and benefits to survivors of workers who are killed on the job. Wage replacement is usually two thirds of the workers average wage but is not taxed so it is usually sufficient to make ends meet while recovering from the injury. Should the employee choose to sue the employer, the waive their right to any benefits from workers compensation and will pay for all costs out of their own pocket until a settlement is reached, which can take months or even years.

Workers compensation doesn’t solely cover accidents either. We’ll use the example of someone working in a place like a coal mine where toxic fumes are constantly present in the workplace. This worker may develop an illness or even cancer after years of employment and this would qualify as a valid workers compensation insurance claim, the employee would receive the same benefits as an employee involved in a workplace accident.

As with all insurance policies, there are exclusions to workers compensation as well. Independent contractors, business owners, volunteers, employees of private homes, farmers and farmhands, maritime employees, railroad employees and casual workers do not qualify for workers compensation insurance. Additionally, the employer, insurance carrier or state provider can request a drug / alcohol screening to determine if the employee was under the influence at the time of the accident. If they were, the claim can be denied. Intentional acts are also excluded.

If you have any additional questions about workers compensation policies, benefits or would like a quote for your business or organization we would be happy to help! We’ve been helping businesses and nonprofit organizations find policies for over 25 years and would love to help you too. Thanks for reading and we hope to see you for the next edition of Get to Know Insurance.

 

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