Worker’s Compensation Unwrapped

The coverage parts of a worker’s compensation insurance policy are crucial in providing both financial protection for injured employees and legal protection for employers. The policy is typically divided into several key coverage sections, each addressing specific types of benefits and liabilities that are linked to work-related injuries or illnesses. Here’s an overview of the core coverage parts of a typical worker’s compensation insurance policy: 

Workers’ Compensation Coverage (Part One) 

This part of the policy is the core of worker’s compensation coverage, and it provides the benefits to employees who are injured or become ill as a direct result of their job duties. It is designed to cover the following: 

• Medical Expenses: Covers the cost of medical treatment that is necessary to treat work-related injuries or illnesses. This can include doctor visits, hospital stays, surgeries, physical therapy, prescription medications, medical devices, and other treatments. 

• Wage Replacement: If an employee is unable to work due to a work-related injury or illness, this coverage provides partial wage replacement. Typically, this benefit is a percentage of the employee’s regular wages, often around two-thirds, and may be provided until the employee is able to return to work. 

• Rehabilitation Expenses: Includes physical therapy or vocational rehabilitation that helps the worker recover and return to work. This may also cover the cost of retraining if the employee can no longer perform their previous job due to a permanent disability. 

• Disability Benefits: This coverage helps replace wages for employees who are temporarily or permanently disabled because of a work injury. The amount and duration of benefits depend on the severity of the disability: 

• Temporary Total Disability (TTD): For workers who cannot work at all temporarily. 

• Temporary Partial Disability (TPD): For workers who can return to work but on a reduced basis due to injury. 

• Permanent Partial Disability (PPD): For workers who have permanent impairments but can still work. 

• Permanent Total Disability (PTD): For workers who cannot return to work due to severe, permanent impairments. 

• Death Benefits: If a worker dies because of a work-related accident or illness, the insurance provides death benefits to the employee’s family or dependents. This typically includes funeral expenses and compensation for lost wages, which are usually paid to surviving spouses, children, or other dependents. 

Employer’s Liability Coverage (Part Two) 

While the primary focus of worker’s compensation insurance is to provide coverage for employees, employer’s liability coverage offers legal protection to employers in case they are sued by employees or third parties in connection with a work-related injury or illness. This part of the policy covers the following: 

• Third-Party Lawsuits: If an employee is injured and sues a third party (such as a contractor or manufacturer) for causing the injury, and the employer is brought into the lawsuit, employer’s liability insurance can cover legal defense costs, settlements, or damages. 

• Negligence Lawsuits: If an employee sues the employer for negligence beyond what is covered by the worker’s compensation system (for example, for failing to provide a safe working environment), employer’s liability coverage can help pay for the defense and any resulting settlements or judgments. 

• Legal Costs: Covers the legal fees and costs associated with defending the employer in a lawsuit arising from a work injury, even if the employer is not found at fault. This includes court costs, attorney fees, and any potential settlements or judgments. 

Employer’s liability coverage also covers certain lawsuits that could arise from workplace accidents. These may include: 

• Loss of Consortium: Claims made by family members of the injured worker for emotional distress caused by the injury or death. 

• Dual Capacity Claims: Claims that argue the employer was acting in a different capacity (other than as an employer) and is liable for the injury, such as being both an equipment supplier and the employer. 

Monopolistic States 

Monopolistic states are states that require employers to obtain worker’s compensation coverage exclusively from a state-run or government-operated insurance fund. Employers in monopolistic states are obligated by law to purchase their worker’s compensation coverage through the state’s own system, and they cannot buy insurance from private insurers or participate in the voluntary market.  These states include Ohio, Washington, North Dakota and Wyoming.  The issue with monopolistic states is Employer’s Liability is not included in the coverage forms.  You still must purchase this coverage separately if you do not want to be left out in the wind when an employee or their family sues you as a result of a work-related injury. 

Security America Solutions 

Protect your business and employees with a comprehensive Workers’ Compensation Insurance program that ensures peace of mind for both you and your workforce. Whether you are in a monopolistic state or not, Security America has worker’s compensation & employer’s liability solutions for you.  Call Crystal Jacobs & the team at 866-315-3838 for more information on the Security America Insurance programs.  At Security America, we offer a broad range of coverages – Professional Liability (Errors & Omissions – E&O), General Liability, Excess Liability, Umbrella, Employer’s Liability, Worker’s Compensation, Contractor’s Equipment/Installation (Inland Marine), Business Personal Property (when in combination with Inland Marine) and Small-Fleet Commercial Auto (when in combination with Worker’s Compensation).  Many of these programs offer discounts to ESA Members!  Be sure to reach out to the ESA Membership Team at [email protected] for other membership benefits!