Workers’ compensation insurance covers an employee’s living and medical expenses if they are injured. In exchange for the company paying the damages under a workers’ compensation policy, the employee gives up the right to sue the company for negligence. Workers’ compensation insurance protects the company from employee lawsuits that might come as a result of a worker being injured.
Some workers’ compensation plans cover lost wages, or a percentage of lost wages, in addition to medical expenses. There may also be provisions for compensation for past or future economic loss, and dependents of a worker killed during employment may also be covered under the policy.
Damages for pain and suffering as well as punitive damages that would be charged due to employer negligence are usually not available in a standard workers’ compensation insurance policy.
Most workers’ compensation insurance plans have an established list of payouts for different types of injuries sustained while on the job. The payments, in most cases, are based on whether or not the injury will allow the worker to find other employment.
Depending on the size of the company and the work done, some companies may be required to purchase workers’ compensation insurance on behalf of their workers. In many states, there are funds set up for public uninsured employers to pay out benefits to injured workers employed by companies that illegally failed to purchase insurance.
Workers’ compensation policies are sold through commercial insurance companies. If the nature of the work or past claim history make the company an excessive risk to insure, a company can still obtain coverage through the state’s assigned-risk program.
While most states provide workers’ compensation insurance through private insurance companies, there are twelve states that operate state funds. A few states even have state-owned companies that run the workers’ compensation programs. State funds are often required to be assigned-risk carriers in order to not underprice or threaten the private companies that offer workers’ compensation insurance policies at market value.
There are attorneys who specialize in workers’ compensation claims in the event that an employer contests an employee’s claim for payment through the workers’ compensation policy. In many states, there are laws in place to ensure that the attorney fees can only be a certain percentage of the money awarded to the worker by a judge or other administrative agency overseeing such disputes.