The Basics Of Workers Compensation Insurance


Workers Compensation is an insurance cover that is a law requirement in all states and that caters for the rehabilitation and medical costs as well as lost wages for all employees injured at work. Almost all business entities in all states(with some crucial exceptions) has to deal with the issue of workers compensation. As stipulated by the state law, it is a requirement for all employers to purchase a cover policy that will take care of the statutory obligations to employees who become ill or are injured as a result of workplace exposure. Regardless of your business size; whether large or small, striking a balance with the statutory obligations is an ever-present problem.

The workers compensation policies were stipulated in the year 1911 in the United States of America. However, before then, the situation was different. Employees who would sustain injuries or fall ill due to workplace exposure had to take legal action against the employers. This was a very cumbersome system that constantly resulted in delayed and difficult compensation. Nevertheless, the challenge was not only skewed to the workers but also the employers; the tort system also caused devastating financial penalties to exposed employers.

New ground was broken in the early 1911 when many states devised and adopted a compromise solution. Wisconsin was the very first state to swing into action but other states hastily followed suit. A “no-fault” system was promptly enacted. It was intended to ensure all employees received efficient and fair financial compensation and medical cover for all workplace-related illnesses and injuries. The so-called compromise system set limits on employer obligations for the workplace exposures, such that costs would be more practical, predictable and affordable. It was a win-win situation for both the employer and the employee.

The requirements have evolved over time and currently, the workers compensation offers a fairly comprehensive package to employees who sustain workplace injury or illness. These benefits comprise of vocational rehabilitation, death benefits , lost wages and medical expenses. If an employer fails to meet the statutory obligations or otherwise carry workers compensation insurance policy then consequently the employer will exposed not only to paying out-of -pocket benefits but also paying default penalties levied by the concerned states.

workers compensation is centrally and primarily controlled by individual territories and states, henceforth, there is no cohesive rule entity that governs premium computation, benefits and coverage. It is therefore key to be cognizant of different sets of rules if your business expands to a different territory.

Well, who really requires workers insurance? This is an important question that any business entity needs to address because not all business is needed to obtain this cover. Partnerships as well as sole proprietors do not need to purchase this cover until and unless they incorporate employees who are not owners. Generally speaking, the cover is required for employees who are not owners.

In conclusion, workers compensation policy is an important cover for employees who are not owners of the business entity. It is put in place to ensure the well-being

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