Workers’ compensation insurance covers and pays for medical care, pharmaceutical, healthcare, and rehabilitation costs of employees’ work-related injuries or illnesses, as well as a portion of the worker’s salary, while out of work. It’s important to note that workers’ comp coverage is not a substitute for health or medical insurance, because it covers only work-related employee injuries or illnesses.
The coverage is mandated by each state and the wage and medical benefits vary by state. If you have one or more employees, you are required to carry it. Failure to purchase coverage can result in severe penalties, ranging from significant fines to possible prison terms or STOP WORK orders. That said—it’s the right thing to do, particularly if the work your company does involves physical labor of any kind. It can help an employee recover from work-related illness and may be able to help them support themselves and their family as well.
Premiums are calculated according to how employees are classified, with regards to the specific type of work they perform, and the rate assigned to each employee classification. The premium rate itself is expressed as dollars and cents per $100 dollars of payroll for each class code. A system called “experience rating” allows for modification of the class rates based on the loss history of an individual business. This system provides business owners a significant amount of control over the cost of their workers’ compensation premium – safe businesses are rewarded with lower premiums and unsafe businesses are penalized with higher premiums.
Generally, workers' comp doesn't cover injuries that happen because an employee is intoxicated or using illegal drugs. Coverage may also be denied in the following situations:
- self-inflicted injuries (including those caused by a person who starts a fight)
- injuries suffered while a worker was committing a serious crime
- injuries suffered while an employee was not on the job, and
- injuries suffered when an employee's conduct violated company policy
Talk to one of our Commercial Specialists at Agape Insurance Partners if you need to get a Worker’s Compensation policy in place or would like to get a comparison quote. Rates do vary among different insurance carriers so like most other forms of insurance, it is a good idea to compare costs every few years. Worker’s Compensation coverage is not usually changed during the policy period so make plans to have your coverage reviewed at your next policy renewal.