Getting a worker’s compensation insurance coverage may seem complicated if you are a business owner. Especially, since there are different rules that apply depending on the state where your business establishment is located.
For starters, worker’s compensation insurance coverage is for the benefit of both the employer and their employees. As an employer, the policy will minimize the risks of legal claims coming from their injured employees. While the insured employees will be assured that they can claim compensation under this policy if ever they get injured or get sick because of their work. This insurance will cover the medical fees, rehabilitation expenses, funeral expenses, or lost wages incurred by the employee as a result of their work-related illness or injury.
To learn more, here are interesting things you probably didn’t know about worker’s compensation insurance coverage:
Most states in the country require employers to get worker’s compensation insurance coverage for their employees.
Getting a worker’s compensation coverage is a requirement in most states. This insurance policy acts as a safety net for workers by protecting them in case they get injured, get sick, or die as a result of their work. It is important to know that employees are only qualified to ask for compensation under this insurance if they have an injury or illness that is ‘work-related.’ This means that their injury must happen during their work shift or their sickness is a result of their job.
Most state laws require employers to get this insurance on behalf of their employees. In fact, in a lot of states in the country, an employer even if they only have one employee — is still required by law to get an insurance policy for that one employee. So if you currently have a business or if you are thinking of starting one, you should research first if your business is required by state laws to get worker’s compensation coverage for your employees.
There are penalties for failing to procure a worker’s compensation insurance coverage for your employees if you are required to do so.
An employer might face serious penalties if it is found that they do not provide worker’s compensation coverage for their employees when it is required by state law. These penalties range from paying a big fine to even years of imprisonment if found guilty. In addition to this, in some states, the establishment may be even ordered to stop its business operations until they comply with the insurance requirement.
For example, in the state of Colorado, the business operations of an employer guilty of failing to insure its employees may be suspended by the issuance of a cease and desist order. They will also be asked to pay a fine worth at least $250 per day that the employer fails to insure its employees. This fine may even increase if they commit subsequent violations.
In Alabama, failing to get workers’ compensation insurance when required by law is considered a misdemeanor. This has a penalty of a fine amounting to not less than $100.00 nor more than $1,000.00 upon conviction.
In Michigan, if a business does not provide workers’ compensation insurance for their employees even if they are required to do so. Then, the employer may be penalized with a fine worth $1,000 or imprisonment ranging from 30 days and six months. Moreover, the employer may be prevented by the court from employing new employees until it complies with the said insurance requirement.
While in Louisiana, there is a civil penalty in the form of a fine equivalent to a maximum of $250 per employee for the first violation. In addition to this, the employer may be penalized for subsequent violations with a fine worth $500 per employee for each subsequent violation, up to a maximum of $10,000.
Texas is the only state that does not require employers to get worker’s compensation insurance coverage for their employees.
In the State of Texas, it is up to the employers if they want to get a worker’s comp coverage or not. Generally, the state law in Texas does not require employers to get this insurance policy for their employees. However, take note that there are exceptions to this.
Since some employers in selected industries are required by state laws in Texas to obtain an insurance policy. For example, motorbus companies and motor carriers who operate on public highways need to get workers comp coverage for their employees. At the same time, dealers of liquid propane and compressed natural gas and employers of inmates in work furlough programs are also required to provide employees with workers’ compensation coverage.
Also, personal injury lawsuits from injured employees can be brought against the employer who has no insurance policy for its employees. Some employers in Texas choose to voluntarily get insurance coverage for their workers to avoid legal suits. Since subscribing to an insurance policy is considerably cheaper than paying legal fees and attorney’s fees in case they are sued by their worker.
Worker’s compensation operates under a ‘no-fault system.’
A “no-fault system” simply means that the insurance company will pay for the compensation claims, regardless of who is behind the accident. So the injured employee can automatically claim compensation without a need to prove that the employer committed a fault that caused his or her injury. In short, the employee can claim his or her workers’ compensation regardless of who is found to have caused the accident.
However, the ‘no-fault system’ has some exceptions. One exception is if it is an intentionally self-inflicted injury by the employee. In this case, the employee is disqualified from claiming under the insurance policy.
Injuries sustained while violating a company policy cannot be compensated under this insurance policy.
If the injury of the employee is sustained while violating a company policy, then he or she is disqualified from claiming compensation under the workers’ insurance policy. This is an exception to the so-called ‘no-fault system.’ Therefore, employees should observe the company policies at all times so that they can readily benefit from the compensation given under this insurance policy.
Employees as a general rule are not allowed to sue their employers if they are compensated under this insurance policy.
As a general rule, if an employee is claiming compensation under this insurance policy then they are also automatically waiving their right to sue their employer. This is very beneficial for the employer since they will be immune from legal suits from their injured employees. Since the liability to pay for the valid compensation claims from their injured employees shall be the responsibility of their insurance provider. This is why a lot of employers see work comp coverage as an investment that minimizes the risks of being sued in court by their employees. In this way, employers can preemptively avoid the stress of going to court and paying costly legal fees and attorney’s fees.
However, there are some exceptions to the rule that an employee cannot sue their employer anymore if he or she is claiming under the worker’s compensation coverage. In some states, if the employer committed reckless conduct like failing to follow safety protocols at work or maintaining dangerous working conditions. Then, the employee can still sue their employer in court for their work-related injuries, even if they are covered under the worker’s compensation insurance.
Mental illnesses are covered under the worker’s compensation insurance coverage.
Employees who are suffering from a mental illness or emotional stress because of their work can claim benefits under the worker’s compensation insurance policy. It is important to note that the employee must have a mental illness that is serious enough to interfere with their ability to work. As such, an employee who has a Post-Traumatic Stress Disorder (PTSD), depression, severe stress, or anxiety as a result of their work can claim compensation under this insurance coverage.
For example, Levi who works as a cashier at a local retail store developed PTSD after he was suddenly held at gunpoint by a robber during his work shift. As a result, this negatively affected his ability to work due to his constant nightmares and emotional distress. In this case, Levi can be compensated under the worker’s compensation insurance policy for the medical expenses he incurred in connection with the treatment of his PTSD.
In some states, an employee is asked to show proof of the connection between their mental illness and their working conditions in order to establish their insurance claim.
As you can see, there are a lot of things that you should know about worker’s compensation insurance coverage. As a business owner, it is important that you get good insurance coverage for you and your employees as this may make or break your business. By getting the best worker’s compensation insurance coverage, you can avoid potential losses and stressful lawsuits.
To know more about worker’s compensation insurance coverage, contact Advantage Insurance Solutions today. We will be with you every step of the way in customizing the best insurance plan that will meet the specific needs of your business. Our excellent insurance professionals will provide you with the best insurance coverage that will minimize the financial risks against your business. Secure the future of your business today by exploring the different budget-friendly insurance options compatible with your business with Advantage Insurance Solutions.