Workers' Compensation and Employers' Liability Insurance make two parts of insurance required by law in many states for all business owners who have any employees. The employment relationships determine the necessity of having proper Workers' Compensation policies to protect both the employees and the employers.
Any employer is liable in case his/her employee suffers an injury at work or develops an occupational disease covered by Workers' Compensation laws. If injured during their work, employees are guaranteed fixed monetary awards from their employer for medical costs and some percentage of lost wages. At the same time, this policy will cover all the liabilities your business might deal with due to work-related employee injuries and eliminate the need for litigation.
Awards are normally limited to "disability or death" endured while performing the employee's duties but not caused willfully by the employee or by intoxication. A disabled employee will receive two thirds of his/her monthly salary during the disability or more in case of permanent physical injuries, or if he/she has dependents. The system also provides payment for survivors of employees who are killed due to work-related accidents or illnesses.
Some laws limit the amounts injured employees can recover from an employer as well as eliminate the liability of co-workers in many accidents, thus protecting employers and co- workers.
Generally, this system is called to provide an economic safety net for employees. However, it is sometimes criticized for restricting workers' common-law rights, such as suit in tort for negligence. Practically, Workers' Compensation covers medical care and compensation for employees who are injured at work in exchange for relinquishment of the employee's right to sue his/her employer for the tort of negligence.
There are two types of basic Workers' Compensation coverage, and each of them plays an important role in your liability protection system:
Workers' Compensation Insurance provides payments to employees who suffer a work-related injury or occupational illness. This coverage is referred to as Part One, according to which the insurance company agrees to pay all compensation to an injured worker.
Employers' Liability Insurance protects your business against lawsuits due to employment-related injuries or illnesses. The lawsuits can come from the employee, his/her family members, relatives and third parties. The Employers' Liability portion is usually offered under Part Two and provides additional coverage included in Workers' Compensation policies. Employees who are injured due to an employers' negligence can pursue their employer for compensation even in case the business goes into liquidation. Employers' Liability will not cover you against claims such as wrongful dismissal, sexual discrimination etc.
Medical care, temporary disability benefits, permanent disability benefits, vocational rehabilitation services, and death benefits make five types of Workers' Compensation benefits.
Don't confuse Employers' Liability coverage with Public Liability Insurance. Employers' Liability is concerned with covering your business against claims made by employees for work-related accidents, injuries or illnesses, while Public Liability Insurance covers businesses against claims from third parties who suffered physical injury or death as a direct result of the business owners' negligence.
There are special state funds, or pools for Workers' Compensation Insurance in many states, however more often businesses will have to find a private carrier for this type of Business Insurance policy.
Workers' Compensation Insurance also has provisions which cover employees injured in other states than the state where the business operates. Since traveling and business trips are often an integral part of work nowadays, this coverage may be very important. Auto accidents while on business also make a great risk to be insured against. Other options include coverage of different types of illnesses and injuries, coverage of financial support for the employee's dependents if the employee is fatally injured, funeral expenses etc.
Different companies offer different Workers' Compensation Insurance quotes. Make your own research into the policy options available and get the best Workers' Compensation Insurance quote for your business and situation. Requirements vary by state, but as a rule you will need Workers' Compensation Insurance for all your employees. If an employer has no Employers' Liability Insurance, health and safety executives could shut them down.
Workers' Compensation Insurance can be purchased through either a licensed insurance company or from the State Compensation Insurance Fund (SCIF). SCIF is a state-operated entity designed to transact Workers' Compensation on a non-profit basis, which operates as the insurer of last resort.
Standard Workers' Compensation benefits are established by each state. However while shopping for a Workers' Compensation Insurance quote; a business owner can select the amount of Employers' Liability coverage for his/her company. Investigate several insurance providers to check what limits they have and what premiums they quote.
Premiums of Workers' Compensation and Employers' Liability Insurance are based not only on payroll and your company's services and activities. Employees are normally classified by their specific work duties. A specific rate is assigned to each employee classification code by insurers. Premiums also depend on the amount of wages the employer pays to the workers, the costs of claims filed by the workers and such factors as dust diseases rates. Note that even minor differences between policies can make a substantial difference in insurance premiums. Premium amounts also vary depending on the Employer's Liability coverage included in the Workers' Compensation package.