What Does Workers' Compensation Cover?

What all does Workers' Compensation cover - and do you really need it? We answer some frequently asked questions about this common coverage.

Posted in Workers' Compensation Insurance on Wednesday, November 17, 2021

Workers’ Compensation policies are carried by the employer to provide benefits for their employees should they be injured due to an accident or sickness that is job related. This coverage is a safety net for employees that provides medical benefits, income benefits, rehabilitation benefits, and death benefits.

Types of Benefits

Medical Benefits

The medical benefits include reasonable medical expenses needed to treat the work related injury or disease.

Income Benefits

Income benefits protect employees by replacing a portion of the employee’s lost earnings for the time they are unable to work due to the work related injury or disease.

Rehabilitation Benefits

Rehabilitation benefits would include therapy, training or medical devices that would be used to assist in the rehabilitation process of the injured employee

Death Benefits

Death benefits would include a burial allowance as well as income benefits to the spouse and or children of the employee.

Employers Liability

Employers liability coverage is also provided to protect the employer in the event of a lawsuit being brought against the employer by a third party such as a spouse.

Additional Considerations

One decision you’ll need to take into consideration is whether you want to be covered under the Workers’ Comp policy. This is completely optional, but does provide important coverage to the individual owner, especially in the event of the owner not having a separate Long Term Disability policy to cover them for lost earnings due to not being able to practice due to a disability.

What Does Workers’ Compensation Cost?

The answer to this question is that it varies depending on a number of factors including type of job, amount of payroll, and the state in which the business is operating.

Workers’ Comp is priced by applying a job classification code to each $100 of payroll. The job classification codes and factors vary widely from industry to industry. For example a roofer will have a much higher factor than someone doing clerical work as the chance of a roofer sustaining a job related injury is more likely and potentially more severe.

When the work comp policy is issued it is very common to use estimated payroll figures. This will result in an audit at the end of the policy term to determine the final premium. This audit may result in a premium refund if the estimated payroll was higher than the actual payroll could result in additional premium owed if the estimated payroll was lower than the actual payroll.

Am I Required to Provide Workers’ Compensation?

Workers’ Compensation requirements vary by state, most states require workers compensation in some capacity, but even if your state does not require you to obtain workers compensation insurance it is still a good idea to protect both your employees and your business.