Understanding Workers Comp Insurance by Pamela S Thibodeaux (c) 2015
Worker's Compensation is a form of insurance that employers maintain to protect their employees earnings in the instance one is injured on the job.
Unless a business is a small, family owned entity, every employer should carry worker's compensation insurance. In fact, most states’ require employers to carry this coverage and many states have minimum requirements, both in the size of a business (according to the number of employees) and the amount of coverage the company must carry.
From the employer's side of things, Worker's Compensation insurance is based on the type of business, the number of employees, the job descriptions within the business, and the amount of payroll the business generates. Income is also factored into the equation. Data is compiled to create the best coverage for the employer. The coverage will state a maximum benefit per occurrence and/or a policy limit. In most instances these figures run into the millions.
For example, an employer may have a $1,000,000 per occurrence with a $5,000,000 aggregate or limit. There is also a maximum medical payment per employee - this is the total amount of money that will be paid to doctors, etc.
On the employee's side - workers compensation pays an injured person a percentage of his or her normal wages - usually 60% while they are out of work due to a job-related injury. Often times the company will also pay for job rehabilitation in the area of expertise for an employee who may not be able to return to his or her previous position. For example, a warehouse employee is injured on the job and cannot return to this type of work, the insurance company may offer to pay to retrain that employee for another position within the company or so that he or she can find gainful employment elsewhere once released from medical care.
Many workers compensation plans include company doctors for the injured employee to see. This is designed to help eliminate fraudulent claims although in our sue-happy society the number of fraudulent claims far outweighs the legitimate ones. Workers Compensation has received a bad reputation but not always due to the company.
Employers pay hundreds, sometimes thousands of dollars a year for this insurance in order to protect their employees and for the most part, these are honest, hard working individuals who respect those who work for them. Still, many see workers compensation insurance as a means by which they can get something for nothing.
We all know of people who were legitimately injured on the job and received adequate protection from their employers workers compensation insurance. We also are very aware of others, not seriously injured who rode this system into the ground, ending in a law suit to set them up for life. These types of claims hurt the industry as a whole and can ruin a small business.
Award-winning author, Pamela S. Thibodeaux is the Co-Founder and a lifetime member of Bayou Writers Group in Lake Charles, Louisiana. She has over twenty years experience in bookkeeping, insurance and tax preparation. Multi-published in romantic fiction as well as creative non-fiction, her writing has been tagged as, “Inspirational with an Edge!” ™ and reviewed as “steamier and grittier than the typical Christian novel without decreasing the message.”
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