Three Things to Know About Workers’ Compensation Insurance

State and federal laws in the United States require many employers to carry what’s known as workers’ compensation insurance. It’s an insurance policy that’s designed to (a) protect employers from a lot of lawsuits and (b) help injured workers get money in their hands quickly after an accident.

Pretty simple, right? In theory, yes. In practice, no. Workers’ compensation laws are fairly complex. To make matters worse, they’re often drawn to benefit employers and insurance companies, not injured workers. Here are three important features of workers’ compensation that are important to understand.

Workers’ Compensation is a No-Fault System

There are two ways to structure rules regarding insurance claims – fault and no-fault.

Under a fault system, the person (or parties) responsible for an accident is financially liable for resulting harm. More specifically, their insurance company is on the hook for paying out claims because their insured party is at fault. At the same time, a party who is responsible for an accident can be partly or entirely barred from recovering compensation.

Before an accident victim can recover compensation under a fault system, fault has to be established. That’s often quite time consuming, because fault is often contested. No one will want to accept responsibility, so it can take time to investigate and get a clear picture of what happened and who’s to blame. 

Under a no-fault system, fault does not have to be established in order for an accident victim to be able to recover compensation. After a car accident, for example, parties in a no-fault state simply turn to their own insurance providers for money to pay for things like medical bills and the cost of replacing or repairing damaged property. It doesn’t matter who caused the accident – the victim’s own insurer pays. 

Workers’ compensation is a no-fault system. However, its the employers who have the insurance. If a worker gets hurt on the job, he or she can file a claim for benefits, regardless of whether or not they contributed to their own injuries. Similarly, it typically doesn’t matter if an employer caused an accident. Benefits are available, regardless of who caused or contributed to the accident.

Why is a No-Fault System Important?

Workers’ compensation has to be a no-fault system in order for it to accomplish what it’s designed to do. If fault were an issue, employers wouldn’t be protected against an onslaught of personal injury lawsuits. 

Similarly, if fault needed to be established, it could really extend the length of time it takes to resolve a claim. When a worker is injured on the job, that’s time they probably don’t have when faced with rising medical costs and lost wages. So, a no-fault system helps to ensure that employees who need money can get it faster than if they had to pursue compensation through a contested civil lawsuit.

Workers Have to Get Hurt While Performing Job-Related Tasks to Qualify for Workers’ Compensation

Generally speaking, an employee must be injured at work or while performing an essential job-related task or duty in order to be eligible to receive benefits from a workers’ compensation insurance policy. So, a worker doesn’t necessarily have to get hurt on a job site or in an office to qualify for benefits. As long as a worker is performing a task that’s necessary to do their job, an injury might qualify them for benefits. 

For example, let’s say a worker is driving a truck to haul materials to a construction site. On the way to the site, the worker gets into an accident. Since they were performing a job-related task, they might be able to secure benefits from their employer’s workers’ comepnsation insurance policy.

What if that worker got into an accident while driving to work that morning? In that case, the injuries stemming from the accident likely wouldn’t qualify. That’s because, generally speaking, traveling to and from work doesn’t count as part of a job. Injuries must be sustained at work or while performing an essential job-related task.

Similarly, many states prohibit workers from recovering benefits if they’re injured on a break. Lunch breaks are typically considered to be an employee’s own personal time. So, most accidents that happen on a break from work-related activity aren’t covered by workers’ compensation insurance. However, it’s important to note that a worker may qualify if they skip their break and eat while continuing to do their job.

In the end, it ultimately boils down to what a worker was doing at the moment they suffered an injury.

Workers’ Compensation Only Provides Limited Benefits

Workers’ compensation insurance was designed to keep injured workers financially stable after a job-related accident. That’s it. Financially stable, and nothing more. So, injured workers are only entitled to certain benefits after they get hurt. While specific benefits (and calculations thereof) vary from state to state, workers’ compensation typically covers costs associated with:

• Medical bills
• Lost wages
• Temporary and/or permanent disability, and
• Death.

Medical bills are generally paid in full, as long as the expenses are necessary and appropriate. However, most injured workers have to seek care from a pre-approved medical doctor. Insurers reserve the right to deny benefits if workers see their own doctor. 

Other benefits aren’t paid in full. When it comes to lost wages or temporary disability, for example, workers often receive a percentage of what they earned before they got hurt. For permanent disability benefits, payments are often calculated based on the degree to which an employee is impaired or disabled.

So, workers’ compensation benefits might not be enough to keep an injured worker afloat after an accident. While any stream of income can help, many workers are often forced to look at other options to supplement their workers’ compensation benefits. Some qualify for Social Security Disability benefits. Others might have to consider another type of job – one that can be done with their current injury or disability. 

It’s important to note that employees waive their right to sue their employer under the worker’s compensation system. However, that doesn’t mean that an injured worker can’t file a lawsuit if someone other than their employer caused them to get hurt. Injured workers can also consider pursuing compensation from co-workers, product manufacturers, property owners, or other negligent third parties. Employers might even be liable if their actions rose to the level of gross negligence.

By filing a lawsuit, injured workers can potentially recover damages for things that aren’t compensated under the workers’ compensation system, including pain and suffering and emotional distress. Any money obtained through a personal injury lawsuit can help to offset the financial stress a worker faces after an on-the-job accident.