Workers Compensation is a type of insurance that helps pay for the medical bills and lost wages of an employee who was injured or fell sick on the job.
In certain cases, it can also help cover the cost of vocational rehabilitation. In the unfortunate case that an employee dies on the job, Workers Compensation can help with funeral expenses and paying death benefits to dependents.
Tracing its roots back to the early 1900s, Workers Comp was a bi-product of the Progressive Era, spearheaded by the muckrakers. With the publicity created by the muckrakers, a group of factory workers set out to expose the dangerous conditions under which they had been forced to work, inspiring a national public outcry for change.
Commonly abbreviated as “Worker’s Comp”, most states now require employers to carry this coverage by law. At its core, Workers Compensation Insurance is designed to prevent employers from being sued by injured or ill employees for medical expenses and lost pay. In fact, most workers comp agreements require employees to relinquish their right to sue in exchange for the protection they offer.
This agreement is beneficial both to the employer and the employee as it simultaneously ensures an employee who cannot work will still be able to pay their bills and that an employer with an injured or sick employee won’t become insolvent as a result of a high-damage lawsuit.
How does Workers Compensation Work?
While the specifics of how workers comp insurance works vary depending on jurisdiction and other situational factors, the basic concept typically functions as follows:
- A covered injury or illness is sustained on the job
- Employee Visits Doctor to Assess Injuries
- Injured or Sick Employee Reports injury or illness to Employer
- Employer Provides Injured/Sick Employee with Paperwork and Info on Reporting Claim
- Employee Submits Report Required by Workers Comp insurance Provider
- Employee Submits Report Required by State Worker’s Comp Board (when applicable)
- Employer Files Claim with Workers’ Comp Insurance Carrier
- Employee’s Doctor Mails Medical Report to Workers Comp Insurance Carrier
- Employer Submits Documentation to State Workers Compensation Board (when required)
- Insurer Approves or Denies Claim
- If Insurer Approves Claim:
- Employee Can Accept Payment Offer (Monthly, Bi-Weekly, or Weekly Basis)
- Employee Can Negotiate a Lump-Sum or Structured Settlement
- If Insurer Denies the Claim:
- Employee Can Request a Review of the Decision
- Employee Can Appeal the Decision
- In Either Case, Insurer Must Notify State Workers Compensation Board of its Decision
- After Employee has Recovered, They Must Notify both Employer and Insurance Company
- The Employee Returns to Work
- Depending on the Severity of Injury, Employee may continue receiving disability payments
What does Workers Comp Cover?
Typically, Workers’ Compensation Insurance will cover any injury resulting directly from an accident at the workplace.
Some examples of injuries that would typically be covered include:
- Slip and Fall Injuries
- Carpal Tunnel Syndrome
- Injuries from a Work-Related Car Accident
- Lung Damage Sustained as a Result of Work Activities
- Back Injuries from Repetitive Movement or Another Job Duty
In some cases, Workers’ Comp will even cover stress-related injuries like heart attacks and strokes. In other cases, it can also cover disease transmission (if the injured party can demonstrate they were infected as a result of negligence on the behalf of their employer).
Which Injuries are not Covered?
While each Worker’s Comp claim is different, injuries or illnesses sustained as a result of employee negligence are rarely covered. Some other situations in which workers comp will not cover an employee injury include:
- Self-Inflicted Injuries
- Injuries Sustained at Home or “Off the Job”
- Injuries Sustained While Committing a Crime
- Injuries Sustained While Violating a Company Policy
- Injuries Sustained Under the Influence of Alcohol or Drugs
Which Employees are Covered?
Workers Compensation Insurance can be written to cover a wide variety of industries and positions. That said, some states enforce restrictions on the types of employees that can legally be covered.
Some positions likely to be restricted from Workers Comp coverage by a State Board include:
- Volunteers
- Farmhands
- Longshoremen
- Railroad Workers
- Partners in a Firm
- Federal Employees
- Owners of a Business
- Employees of a Private Home
- Workers Not Licensed to Work
- 1099 Independent Contractors
- Certain Types of Subcontractors
How the Cost of Workers’ Comp is determined
Much like other types of business insurance, the cost of workers compensation coverage depends on a number of factors. Typically, businesses in each state are grouped into classes based on injury patterns and average claim costs.
Workers comp rates are calculated for each class based on the five-year average loss cost for all businesses contained within, overlaid with that State’s unique economic factors. The purpose of this classification system is to try to ensure that each class of business incurs a coverage cost that makes sense in comparison to the average risk of their operations.
Much like Tomins takes the time to learn about each business we serve to help ensure each client is getting the best coverage at the best price, the Workers Comp classification system is designed to help make sure businesses are paying the most equitable price for the coverage they need.
In some states, this system is complimented with an additional modifier known as “experience rating” whereby business owners who strive for a safe workplace and minimize claim frequency are rewarded with a lower premium cost.
Getting Workers Compensation Insurance for Your Business
If you need Workers’ Comp coverage for your business, Tomins has you covered. Rather than follow the one-size-fits-all approach of most insuretech firms, we take the time to understand the unique needs of each business we serve.
Workers Compensation Insurance from Tomins is Mindful, Modern, and straightforward—getting you all the coverages you need and none that you don’t.
Don’t settle for the NEXT best thing. Tomins—because you deserve an insurance partner who works as hard as you do.