What Does Worker’s Compensation Insurance Cover?

Oct 17, 2019 | Business Insurance

If you are an entrepreneur or business owner, it’s most likely that you are trying to find ways and exploring other creative plans to generate more income and grow your business, especially during this difficult time. While it has really proven to be a challenge, it is important to secure all business necessities both for your entrepreneurial ventures and all your employees, respectively. And one that shouldn’t be amiss and taken lightly is insurance that benefits both employer and employee. That is Worker’s Compensation Insurance.

While this is a system of collective liability, it isn’t a complete science and still has a bit of field to improve upon. This is why it’s not only essential for both employers and employees to procure and insure themselves of Worker’s Compensation, but also be able to identify its coverage as both a benefit and a possible trade-off for a lucrative or cost factor opportunity.

Workers Compensation Insurance Coverage

Previously called “Workmen’s Compensation”, the coverage of Worker’s Compensation Insurance varies from each state. It is also very helpful to know and understand the legislation, statutory rights, and the regulations upon which they were based.

Since each state has its own laws regarding Workers Compensation Insurance coverage, it’s important to know what those laws are.  Though most states require a business owner to carry workers compensation insurance for all W2 employees, there are a few states where this coverage is not required by law, however, the business owner can still be held liable for injuries or illness an employee sustains while on the job.

Worker’s compensation will cover the cost incurred, to get an employee back on their feet after a work-related illness or injury. In the event of a permanent disability or even death, workers compensation coverage is there to not only help the employee and their family, but it is there to help the business owner as well so that they can keep their operations going while having the peace of mind that their valued employee is being taken care of.

So if you run a business in an industrial, mechanical, electrical, construction, roads & railways and other physically taxing and onerous field, you’d be much more secured to have your employees, your whole company for that matter, be insured with Worker’s Compensation.

This way, you’re not only providing your employees with fair compensable work insurance but possibly avoiding unnecessary expenses levied by statutory regulations of the states.

In the same vein, if you happen to be an employee or working in the aforementioned industries, you’ll be doing yourself a lot of favor and escape future damages that might be proven irrevocable by simply being insured by Worker’s Compensation.

While these are all facts, it’s worth noting too that Worker’s Compensation Insurance doesn’t completely guarantee an employee, especially one that has been terribly injured rendering him unfit to perform tasks required of him, to protect and keep his current position in the company. 

And there were some common remedies made in the law (Differs from state jurisdiction) to safeguard employers by limiting their liabilities to their stakeholders, which in this case are the employees. Some of these remedies are contributory negligence, which states that injury incurred, physical or mental, as a result of malpractice, inadequacy, as well as out of the ordinary prudence required to get the job done successfully.

The other remedy is “Fellow Servants Doctrine” which renders the employer not liable for any damages that befall his employees if and when the partial or main cause of injury was by that of a peer or co-worker. The last of the so-called “unholy Trinity” of tort defenses is the assumption of risk. This permits the employer from having liability to an injured employee if the said worker sees, understands the dangers associated with the task but still voluntarily accepts the job. These are only some of the laws that both parties must be aware of.

While these things might sound a bit troublesome, especially to the employees, they need not worry because an employer or company cannot just terminate and strip off a worker of his job just because his work-related injury deemed him incapable of performing the said job.

In fact, that is gross discrimination and a blatant violation of the labor law. In this case, if eligible, one can be granted with a Wage-Loss Replacement (WLRP) or “Lost Wage Differential” benefit which is basically an employer & employee agreement of a sum total amount of money given to an employee to compensate for the damages incurred and loss of job or source livelihood as a result of physical or mental incapacity.

This is why it is a must for both parties to make themselves aware of the validities of claims, the severity of injuries, cost coverage, and deadlines of a Worker’s Compensation Insurance.

Deadlines and Validation of Injuries

It is important to know that each state also has its own rule as to how long an employer can wait to file a workplace injury or illness claim. Depending on the state, the deadline may range from 30-90 days after the injury or said illness happened. The initial medical evaluation should be done by the approved medical provider that the employer chose. If the injured worker fails to notify their employer or the employer fails to file the claim on time, they may lose the right to continue the claim and the employer could end up paying out of their pocket for the expenses that are accrued.

* In the event of an emergency, it is always best to get to the quickest and closest medical provider first, then notify the employer as soon as possible.

Valid injuries:

  • When an injury or accident occurs while on the job
  • Driving or traveling for business reasons. Like Business trips. 
  • Accidents caused by natural disasters.
  • Illness or injury caused by exposure to toxic chemicals from work.
  • Injuries from workplace violence.

Invalid Injuries:

  • If the injury is caused by a fight started by the employee who’s filing the claim as it will be considered a self-inflicted injury.
  • When the claim was made after the employee resigned.
  • No one witnessed what happened. No recordings or videos.
  • The employee couldn’t meet the State’s deadline for reporting the injury and filing a Worker’s Compensation Claim.

Mental Health

It is also important to know that not only are physical injuries covered, mental health issues can also be covered.

It is common knowledge that most workplace injuries are physical and can be seen and treated as necessary. For instance, while working, a large piece of metal suddenly falls and injures an employee. The employee’s physical needs will be addressed as needed, but what about the trauma as a result of the accident?

In fact, some healthcare professionals at mentalhealth.org.uk consider mental & physical health as a unibody, so to speak. The poor physical condition affects the mental state of mind of an individual, causing risks that further impair not only the brain but the whole body. In the same way, a poor state of mind can be proven detrimental to a well maintained physical body. Research shows that 32% of people suffering from high levels of distress can most likely die from cancer. Similarly, depression is also identified as one of the contributors to coronary heart disease. Hence, physical mental health should be treated equally and be seen as imperative to one another.

Mental health is just as important as physical injuries and should not be neglected.  PTSD (Post Traumatic Stress Disorder) may occur after a tragic incident. This too must be treated and taken care of.

How to determine if the work-related stress is considered a PTSD and can be compensated?

Stress is something that everyone experiences from time to time. However, the stress that is felt after a traumatic accident, may not be normal stress any longer. It could be that the employee is suffering from *PTSD. This is a very serious condition that will need to be treated.

Stress after an incident cannot be considered PTSD unless:

  • The symptoms of the stress must last or start at least a month or more after the incident or injury happened.
  • Must be diagnosed by a psychiatrist or psychologist.

Symptoms that last in less than a month cannot be considered PTSD. However, even if the symptoms don’t meet the required time frame, help should still be sought to prevent anxiety from worsening and potentially turning into PTSD.

*Some states have regulations regarding stress as a compensable worker’s compensation claim. Always, check the laws of your state.

Although PTSD caused by physical injury in the workplace is the most common mental illness that can be associated in this situation, it is also noteworthy to become accustomed to other mental illnesses that can affect employees while they are at work. Depression and anxiety–also known as panic disorders are two of the most widely observed mental illnesses developed inside the workplace environment. These illnesses shouldn’t be taken lightly because they are as deadly as terminal diseases. According to a public information sheet published on the World Health Organization’s site, both depression and anxiety are usually the reported problems that cause substantial changes to an individual’s state of mind. These illnesses are formed and developed through constant harassment (Physical, sexual, and/or mental) and bullying received from colleagues, bosses, and even stress from work overload. And from there, an employee can greatly suffer a bunch of diseases linked to the aforementioned mental illnesses such as but not limited to:

  • Heart Complications
  • Multiple Sclerosis
  • Hypothyroidism
  • Stroke
  • Hormone Imbalance

It is said that depression is one of the leading contributors to the loss of productivity around the world. As a result, it paralyzes growth in both micro and macrostate. In 2019, the WHO reports an estimated global economic loss of USD1 Trillion per year in lost productivity. Furthermore, inadequacy and disability due to mental illness pose a huge threat not only to business owners and working professionals but also to society as a whole. 

Therefore, it is everyone’s responsibility to keep themselves physically able and mentally sane.

In the event of a positive diagnosis, one should immediately seek medical advice as there are tons of effective psychological and pharmacological treatments available at hand.

Coverages available for a valid claim

Short Term and Long-Term Care

Short term care includes immediate needs after an injury or accident. If the damage is not severe, the employee will receive regular medication, check-ups, and x-rays as needed and ordered by a licensed medical doctor.

These injuries may vary from simple cuts and bruises to sports-like sprains and pull & tear. 

Long term care is available when the condition calls for more time to recover.  This may include both medical and therapeutic care. How long and how often the therapy is needed will depend on the severity of the condition.

Some examples of these are injuries caused by avulsion wounds, twisting & breaking of bones, and dislocation of joints (among others).

*Both short & long term care is applicable to mental illnesses too.

Permanent Disability

A permanent disability can be physical, mental, or both at the same time. A person’s injury is considered a permanent disability when the individual is severely limited in his engagements in simple physical and mental activities rendering him immobile in both states. Some of the most common permanent disabilities are as follows:

  • Amputation
  • Cerebral Palsy
  • Spinal Cord Injury (SCI)
  • Severe Epilepsy
  • Muscular Dystrophy
  • Cystic Fibrosis (CF)
  • Spina Bifida
  • Acquired Brain Injury

Some cases may lead to a permanent disability. However, most worker’s compensation plans will provide coverage in the event of a permanent disability.  Vocational Rehabilitation may also be available if the injury is deemed permanent and the employee is no longer able to perform the same type of work, as before the injury occurred. This coverage may help the employee to remain at the same company in a different role or enable the employee to seek employment elsewhere.

Lost Wages

Losing wages from the time off work can be devastating for the employee and their family. Most worker’s compensation plans will pay an injured worker approximately 66% of their normal weekly wages. The amount of the wage benefit that an employee may get will depend on the amount they earned the previous 52 weeks, gross.  

The demand for compensation to cover the damages incurred by the injury that happened on-site and potential earnings they could’ve gained during their absence from work. Moreover, they should be able to prove in front of a court or jury the sum total amount of their claim. The employer can be their aid for the claim since they are solely or partially responsible for their worker’s well-being. 

Normally, lost wages compensation is computed by multiplying your hourly rate by the number of days you’ve missed work and multiply it by how many working hours you render each day. If you’re also likely to work overtime during shifts, you might as well include that in the computation. 

Currently, it is more important than ever to be sure that your business is covered if an employee is injured or becomes sick while on the job.

It definitely wouldn’t hurt to be more knowledgeable and engaged during these events. Gather data, jot down every detail, and try to minimize or cause further damage to yourself, your business, the workplace, your employees, or colleagues that can be affected by the situation. In the end, we believe everyone’s safety and well being should be of the utmost importance. 

At Advantage Insurance Solutions, we take pride in our ability to work with business owners in order to customize an insurance plan that will meet the unique needs of your business. Our insurance professionals will search dozens of carriers to make sure that your business has the best coverages at rates that will fit your budget.

Contact us today and let’s talk about how we can help you minimize the financial risks related to running your business.