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What is Workers’ Compensation Insurance?

There are many expenses and needs associated with starting a new business. Workers’ Compensation Insurance is something that owners should prepare for. This is true whether they are opening a salon or an accounting firm. 

What is Workers’ Compensation Insurance? 

Workers’ Compensation Insurance is a type of employee benefits policy to provide wage replacement and medical expenses resulting from workplace injuries or illness.

The type of benefits include:

  • Covering medical bills
  • Replacing lost wages due to time missing work
  • Disability benefits
  • Paying for funeral expenses if lost of life

Workers’ comp also has advantages as an employer. If an employee sues your business, it can help cover legal expenses.

Meeting State Mandates

Every state in America has mandated for employers to carry Workers Compestionation Insurance, except for Texas. Requirements vary by state, by industry, and even by the size and type of business. 

The coverage itself is sometimes referred to as social insurance because it is based on a sort of social contract between management and labor. 

How Does the Coverage work?

Based upon the state that the business is located in, employers must follow set rules and regulations. The goal here is to ensure that employees have the proper coverage that is necessary to protect them. 

Employees also must meet the criteria associated with filing Workers’ Compensation claims. These have to be injuries that occur or illnesses caused due to duties performed while on-the-job. 

Examples in this category include:

  • Injuries from operating machinery
  • Slipping and falling on the stairs at work
  • Breaking a bone while carrying heavy materials

What Is the Claim Process?

Employees who are injured at work because of an accident must visit a healthcare provider or professional. The visitation serves to confirm and document the injury, and its overall impact on the employee. 

Medical reports from physicians are often necessary when it comes to claims. Once this documentation is gathered, employees can begin the filing process established by their state. 

There is paperwork required during this process, as well by the specific insurance company that is covering the policy for the employer or business.

Final Takeaway

Workers’ Compensation Insurance is a valuable tool that serves to protect both employees and businesses. It is difficult to know what the future will hold or when accidents will occur in the workplace. This insurance is a safety net for medical care and in the instances where injury recovery is necessary.

Updated on April 25, 2020

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