Purpose of Workers' Compensation Insurance and What All it Covers?

25.07.2019
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Purpose of Workers’ Compensation Insurance and What All it Covers?

Introduction
Workers’ compensation insurance is an insurance type which provides wage replacement and medical privileges to employees injured in the period of employment in exchange for the compulsory surrender of the employee’s right to sue their employer for the tort of carelessness. Workers’ compensation is commonly known as workers’ comp. Workers compensation insurance protects your workers and employer’s business from the workplace or work linked accidents, sicknesses, and also death. Almost every country requires that employers have insurance to cover medical costs and suffered wages for workers who are harmed or become ill on the work. If an employer doesn’t carry workers’ compensation insurance, the employer could be liable for these costs and be subject to fines or penalties.

Even if an employee has health insurance, the employer is responsible for their medical costs if they sustain a job-related injury or illness. Further, the employee is entitled to a portion of their regular wages during the time that they are incapable to work due to their injury or illness. These costs are fulfilled by workers compensation insurance. If the employer doesn’t have insurance, he/she will have to pay these costs out of his/her own pocket.

Purpose
It is one of the good practices in employment to make the workplace safer for employees to carry out their tasks. All the required safety equipment should be readily available for safety purposes. All the safety rules and regulations should be followed to make sure every employee is safe in case of an emergency. Some accidents may happen even if all safety procedures are followed. Workers’ compensation comes into play in such situations. It helps the injured employee to get medical support and other financial losses. The two main purposes of workers’ compensation are:
1. It makes sure that injured workers get medical support and compensation for a part of the income they lose while they are not able to go to work.
2. It shields employers from claims by injured workers.

Covers
Workers’ compensation coverage provides benefits to workers who have been injured in the course of work. The coverage is afforded irrespective of fault. Which means an injured employee do not need not sue the employer to receive benefits. Furthermore, the injured employee is usually qualified for benefits even if his or her carelessness resulted in injury. For example, suppose an employee sustains an eye injury at a construction site. The injury could probably have been avoided had the worker been wearing safety glasses, as he had been instructed to do. Despite that, the worker should still be eligible for the coverage.

Workers’ compensation laws generally provide the following types of benefits:
1. Medical Coverage: Includes doctor appointments, hospital treatment, prescription medications, physical treatment, and other medical procedures.
2. Disability: Provides a partial replacement of income lost when employees are unable to work due to an on-the-job injury. The partial or total disability may be temporary or permanent.
3. Vocational Rehabilitation: Allows workers who cannot return to their former occupation to learn a new skill based on their current capabilities.
4. Death Benefits: These benefits are provided to the spouse and minor children of an employee killed on the job.

Exclusions
Extra benefits may be granted by workers’ compensation law in case if the employee is injured because of something the employer do or fail to do. For example, if a person owning a wooden shop was repeatedly requested by an employee to replace a broken guard present on one of the wood cutting machines. But the employer ignored his request and the worker got his little finger injured due to that broken guard on the wood cutting machine. As the employer ignored the request, the worker would receive twice the amount of workers’ compensation he would have received. The extra compensation will not be covered by workers’ compensation policy and the employer would have to pay for it separately as a penalty. Various exclusions are present in the standard workers’ compensation policy. A lot of situations are mentioned in the policy where the insurer will not cover any excess benefits because:

1. Of serious and willful misconduct done by the employer.
2. Employer intentionally employs an employee who is underage and thus violates the law.
3. The employer fails to comply with a health or safety law or regulation.
4. The employer discharge, coerce or otherwise discriminate against any employee in violation of the workers’ compensation law.

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