CompMonitor: An Experience Modification Reconciliation

What is workers compensation insurance?

What is workers compensation? Workers comp had its beginning in 1914 in New York and soon spread to all 50 states, the District of Columbia and Puerto Rico. Each state has its own particular statute that defines an employee's rights to coverage and protection and employers are required to provide it-that is with the exception of Texas. Texas is the only state where an employer can opt out of workers comp coverage but should do so in a very specific way.

The sole purpose of workers compensation coverage is to protect employees for injury and diseases sustain while working for an employer. The workers comp policy is designed to pay specific benefits to employees if they sustain an injury on the job or contract a disease due to the nature of the job.

A workers comp policy has two parts (part ONE & TWO). Part ONE is called "Workers Compensation Insurance" and part 2 is termed "Employers Liability Insurance".

Workers Compensation Insurance

Let's look at what part 1 of workers comp coverage actually provides! Benefit levels will vary by state but every workers comp policy will provide:

  1. for the payment of the cost of medical care. All states have unlimited amount of benefit for injuries and rehabilitation is frequently provided for in the workers comp policy.

  2. for loss wages due the employee while they are unable to work due to the injury. This is commonly referred to as disability and does not provide for full payment for the lost compensation.

  3. benefits to survivors in the event the employee is killed on the job. This benefit is set up to provide some help to those that must carry on after the work related death.

The amount paid for a workers comp injury is set by state law and payment is required regardless whether the loss is due to a physical injury or an occupational disease. It should be understood that each state has different benefit requirements for the workers comp coverage.

The coverage afforded by the policy will pay for whatever the injury costs during the life time of the employee and is unlimited. The employee will be paid for medical and loss of income for the rest of their life if the injury or illness has continued medical bills. If they are unable to work due to their injury, the workers comp policy will pay for loss of wages to the extent required by the state in which the employee lives.

Employers Liability Insurance

Now let's briefly discover what the workers comp policy provides in part 2 - Employers Liability Insurance.

This coverage protects the employer against law suits brought against the business by the injured employee or the survivor of the employee. If an employer is thought to be grossly negligent in the cause of the injury, the employer runs the risk of being sued for that negligence. Under part TWO of the workers comp policy, the employer would be defended in such a suit. If a judgment were rendered against the employer, that judgment would be paid by the workers comp coverage but no more than the limits provide for in the policy.

Now you have a better understanding of just what it workers compensation. As you can see this particular coverage provides security for both the employer and the employee. The employer knows that if an employee is injured, they will be taken care of without jeopardizing the financial status of the business. The employee is secure in knowing that he/she is protected if injured on the job.


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