What is Workers’ Compensation Insurance?

Workers’ compensation insurance provides medical and wage benefits to people who are injured or become ill at work. The coverage is mandated by each state and the wage and medical benefits vary by state. Business owners are protected from civil suits from their workers who become injured on the job. Each party benefits have limitations. Workers’ compensation insurance is purchased by businesses, and is underwritten by insurance companies and, in some states, underwritten by publicly supported state funds.


Workers’ compensation provides medical expenses, lost wages, and rehabilitation costs to employees who are injured or become ill “in the course and scope” of their job. It also pays death benefits to families of employees who are killed on the job.


Workers’ compensation is meant to protect both employers and employees should an illness or accident arise while on the job. Each state has its own rules and regulations that employers must follow to ensure that proper coverage will be provided for injured employees.


Employees filing claims for workers’ compensation insurance can only do so if their injury or illness is caused by their duties while on the job. Common examples include injuries that have resulted from a slip or fall, a strain on the body from heavy lifting, or an accident while operating machinery.


All states, with a small number of exceptions, require businesses with employees who are not owners, to purchased workers’ compensation coverage for those employees.


Businesses that fail to provide workers’ compensation coverage can face severe and costly repercussions including payment of claims out of pocket, fines, and possible imprisonment, as well as possibly losing the right to conduct business in the state.



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