Worker’s Compensation Insurance Author:    Posted under: Health InsuranceHealth Insurance Types

Almost all employees or workers have a company-sponsored health care insurance. This insurance takes care of them if they fall ill or have been involved in an accident or needs emergency care.

There is another kind of insurance that is beneficial for both employer and employees or workers. This is known as Workers’ Compensation Insurance. Workers’ Compensation Insurance protects the workers from work-related injury, illness or death. Having worker’s compensation insurance will ensure that the employee’s finances are secured in the event such things happen.

Workers’ Compensation Insurance is considered to be a “no-fault” type of insurance and is actually state-mandated. Laws governing workers’ compensation insurance coverage differ for each state. It ranges from the amount an insurer must pay, minimum number of employees needed for coverage, safety standards and drug testing. In some states, companies with less than five employees are not required to get worker’s compensation insurance. In California, though, an employer must get coverage for even one employee.

This particular insurance covers the employee or worker’s medical bill or expenses and loss of wages (for the period he or she was not able to work due to the injury or illness). In case of death, the insurance also compensates the family a certain percentage of the deceased’s income. In the event that the employee can no longer perform his or her job due to the injury, the workers’ compensation insurance will pay for cost of training for another position within the same company, if available.

The Workers’ Compensation Insurance protects the employer as well. The coverage protects the employer from financial liability and legal actions, should there be any. Instead of paying liability costs, the employer pays a premium based on the size of the company including number of employees and the injuries the company has suffered over the past years. Premium rates vary, yearly, depending on these factors.

If the employer, on the other hand, fails to provide workers’ compensation insurance coverage, then it is considered to be Class A Misdemeanor. The penalty for such an offense is three times the annual premium that should have been made if the company did insure the employee.

The employer is not eligible for coverage under the Workers’ Compensation Insurance. They can, however, get an alternative coverage such as occupational disability insurance coverage. This type of coverage can be extended to employees and covers injuries and illnesses outside of work. The employer can actually choose between worker’s compensation insurance or occupational disability insurance coverage. Occupational disability insurance is more expensive since it has a bigger coverage. But for most employers, workers’ compensation insurance coverage is the best option for them than paying for a higher premium.

The Division of Workers’ Compensation oversees the day-to-day operation of this system. It reviews and approves the compensation insurance policy rules. The employers give notification that they acquired coverage and reports injuries as well. The department also acts as a mediator whenever disputes over benefits arise.

Department of Insurance, Financial Institutions and Professional Registration


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