Workers Compensation laws were created to ensure that employees who are injured on the job are provided with fixed monetary awards. This compensation eliminates the need for litigation and creates an easier process for the employee. It also helps control the financial risks for employers since many states limit the amount an injured employee can recover from an employer.
Workers Compensation Insurance is designed to help companies pay these benefits. As a protection for employees and as a legal responsibility, most states require that employers carry some form of Workers Compensation Insurance. Workers Compensation Insurance should not be confused with health insurance because Workers Compensation is designed specifically for injuries sustained while on the workplace premises or elsewhere, or in auto accidents while on business, and work-related illnesses.
Workers compensation provides payments to injured workers, without regard to who was at fault in the accident, for time lost from work and for medical and rehabilitation services. It also provides death benefits to surviving spouses and dependents.
Each state has different laws governing the amount and duration of lost income benefits, the provision of medical and rehabilitation services, and how the system is administered. For example, in most states there are regulations that cover whether the worker or employer can choose the doctor who treats the injuries and how disputes about benefits are resolved.
Workers compensation insurance must be bought as a separate policy. Although in-home business and business owners’ policies (BOPs) are sold as package policies, they don’t include coverage for workers’ injuries.