Why Do I Need Worker's Comp Insurance And What Does It Cover and Not Cover?
In the early 20th century, prior to the implementation of workers compensation laws, an injured employee’s only option was to bring a lawsuit against their employer in hopes of receiving monetary compensation for injuries or illnesses. This process could be lengthy and difficult, and often left both parties facing financial hardship.
Today, workers compensation is required by law in most states. When an employee is injured or falls ill in the course of their work, workers compensation insurance can provide monetary compensation for medical care, rehabilitation and lost wages, as well as provide death benefits to family members.
In most cases, in exchange for this compensation, the employee gives up their right to file a lawsuit against their employer, or to have a lawsuit filed on their behalf. However, in certain circumstances, employees can file a lawsuit against their employer. Part B of the workers compensation policy, called Employers Liability, provides coverage in cases like this.
The federal government has a workers compensation program for federal employees, but each state has its own laws and regulations for state employees and for businesses that are owned or operated within the state. Without workers compensation insurance, an employer is exposed to the potential of paying these benefits to the employee out of pocket and facing fees from the state for not following local laws.
Why Do I Need Workers Comp Insurance?
One of the most important parts of running a business is keeping your employees safe. While there are many ways to minimize the likelihood of injuries and provide a safe work environment for your employees, accidents do happen. Medical bills and rehabilitation can be costly, and just one accident or negligent act can cost your business everything.
Some states require workers compensation insurance. In order to follow all local laws and regulations. For instance California law requires workers compensation insurance in every work situation.
What’s Covered in a Workers Compensation Policy?
If you own a California-based business workers compensation is critically important. For example, when it comes to the construction industry because of the physical risk inherent in the profession. You (or your employees) are lifting things. There may be strain on the muscles and ligaments. There could be an accident. You know you need it and it’s required by law. But what’s covered in a workers compensation policy?
Workers compensation is an insurance policy that helps to protect your assets in the event that one of your employees is hurt on the job.
When your employee is injured on the job, the policy provides them with financial support to cover medical expenses and lost wages.
Medical coverage + wage replacement = “indemnity”
Only injuries that arise out of and in the normal course of business are reimbursed. Medical coverage may include physician visits, prescription medications, surgeries, etc. The amount to cover lost wages is based on the employee’s weekly wage as determined by California law.
What’s not covered?
The key to workers compensation is that the injury must be work related. If an employee gets hurt offsite on their lunch break, that typically doesn’t fall under their coverage. If you are commuting to your regular workplace, an injury is likely not covered but if you’re traveling to another job site during work hours, then it usually would be. Employees may also be denied coverage for self-inflicted injuries or if the employee was committing a crime.
Protect yourself from unexpected financial burdens by setting up your business with workers comp insurance. GET A QUOTE ON A POLICY HERE or if you have any lingering questions about what is or is not covered, give us a call at 858-771-9590