Workers Comp 101
What is it?
Worker’s Compensation Insurance provides medical & disability benefits to employees injured on the job and protects the employer from lawsuits brought by an injured employee. All states, with the exception of Texas, require an employer with employees to carry Work Comp insurance and the coverages afforded are determined by the specific state’s workers compensation laws. In the construction field, many contracts will require the contractor to carry Work Comp insurance if they have employees or not.
What does it cover?
Coverage is typically divided into three parts: 1) Workers Compensation Insurance (or Medical Expenses), 2) Employer Liability Insurance, and 3) Other States Insurance.
- Workers Compensation insurance covers the injured employee’s medical bills, related expenses, and lost wages in the event of a covered claim. This coverage part has no limit and the insurance company agrees to pay all benefits required by the specific state’s workers compensation laws. This coverage part also covers disability, death, and disease damages caused by workplace accidents and exposures.
2. Employers Liability insurance protects the employer from lawsuits by employees who are injured on the job where the injury isn’t subject to the statutory requirements. Coverage is also provided for employer negligence which may have contribute to an injury. Furthermore, this coverage part also provides protection from third-party over suits. For example, an employee is injured using a piece of machinery. Work Comp insurance is the “sole-remedy” for workplace injuries so the employee cannot sue the employer but sues the manufacturer of the piece of machinery. That manufacturer then turns around and sues the employer for inadequately training the employees or modifying the machinery. Coverage for this part is broken up into 3 limits: 1) Bodily injury by accident (per occurrence), 2) Bodily injury by disease (per employee), 3) Bodily injury by disease (policy limit).
3. Because workers compensation coverages are determined by each state, Other States insurance provides coverages in case an employee is injured on an out-of-state business trip or project.
Who needs it & why?
Any employer who has employees is required by law to carry workers compensation insurance. Working without this insurance can lead to significant fines & penalties as well as serious lawsuits from injured employees. In California, the minimum fine is $10,000 and can also be punishable by imprisonment of up to one year in jail.
Also, it is becoming more and more difficult to get qualified for certain jobs or work with reputable companies if you do not have workers compensation insurance. This is because the prime contractor or company will be charged additional premium on their work comp policy if the subcontractors they hire do not have an active work comp policy in place.
How do I get covered?
Contact Builder’s Shield at 855-95-SHIELD or fill out the short form and we’ll contact you shortly. To expedite your workers compensation insurance quote, please have your company’s tax id number and estimated annual payroll ready. We look forward to taking care of your insurance needs!