Workers compensation is a type of insurance that provides employees with payment for lost income and medical expenses due to some type of job-related illness or injury. It is a way of protecting company employees by guaranteeing that in the event of a work-related injury or sickness, they will receive compensation. How Employers Benefit From Having Workers Compensation Insurance Employers who pay into their state’s workers compensation insurance program are also provided with some vital coverage. By paying into the fund, employers are absolved of any liability for claims an employee might wish to file. In addition, employers are afforded specific legal protections that grant them immunity from lawsuits based on an employee’s injury. State Mandates States require employers to pay these benefits and employers must have proof that they have the financial resources to cover the cost of any potential claim. The usual way that employers prove this is by purchasing workers compensation insurance. Employers are legally obligated to participate in their state’s program, although there are some exceptions. Those few exceptions vary by state. Self-Employed Workers Compensation Insurance Self employed people don’t have to have workers compensation insurance, but in some places, there may be provisions that allow self employed workers to "opt in" as self employed business people. Having this coverage means that a person who is self-employed will be able to get insurance to cover the costs of treatment for illness or injury. Even if your state doesn’t require that you have workers compensation insurance, having it is a good idea, and it provides you with a guarantee of protection should something happen. Workers Compensation and Small Businesses Sometimes small business owners fail to see the benefit of workers compensation. They think of it as an overhead expense, and unless and employee is injured or gets sick because of the job, they never see the benefit. Types of Workers Compensation Insurance Benefits Workers Compensation provides coverage in four different ways.
- Death benefits provide payment for some of the wages a family loses because of a job-related death.
- Workers compensation insurance may provide burial benefits to help with some of the expenses related to the cost of a funeral.
- Medical benefits are designed to cover the cost of medical care and treatment for a job-related illness or injury.
- Income benefits are designed to pay employees a portion of wages they lose due to illness or injury.
Workers compensation insurance provides a wealth of essential benefits to both employees and their employers. Employees gain the assurance that they will not be totally without income in the event that they are injured on the job or suffer from some illness related to their job. For employers, they too are protected in this same way. Employers who pay into the state workers compensation insurance fund get legal protection that they wouldn’t otherwise have. That means they don’t ever have to worry about whether or not a lawsuit could eat up all of the company’s profits and wipe it out entirely.