Workers’ Compensation Insurance

Workers’ compensation insurance covers medical expenses and lost wages incurred by employees injured on the job. These expenses can include physician’s visits, hospital costs, lost wages, death benefits and physical rehabilitation. Most policies cover employee injuries that occur either on or off the job site, as long as the employee was conducting operations on the company’s behalf. Every state requires that qualifying companies carry workers’ compensation insurance coverage, either through private insurers or through state-operated agencies.Most workers’ compensation insurance policies come in two parts. Part A provides for the basic benefits listed above with no set limit. Claims are paid on a no-fault basis, as long as the employee can show that he was not intoxicated at the time of the incident. If a drug test shows that the employee was under the influence of drugs or alcohol when the injury occurred, the insurer does not need to pay the claim. Employers often require employees to submit to a drug test after an injury to determine their mental states at the time of the incident.

Part B of the workers’ compensation insurance carries set limits on employee benefits. Companies in which employees engage in dangerous activities, such as high-rise construction or operating heavy machinery, may purchase Part B insurance for incidents not covered in Part A. The benefits in Part B can include 100 percent coverage on medical costs, two-thirds compensation on lost wages and lump sum payments for dismemberment, disability or death benefits.

Each state has different requirements that cover the benefits, regulations and premium costs for workers’ compensation insurance coverage. Small businesses in which the owners are also the only employees, such as sole proprietorships or partnerships, are not required to carry workers’ compensation insurance, as these employees are often covered by their own personal policies. Businesses in which the employees do not have an ownership stake must purchase workers’ compensation insurance to protect them from claims stemming from employees injured at work.