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  • Writer's picturejoseph retcho

What Is Worker's Compensation Insurance


construction worker

Almost every state mandates that employers carry worker's compensation insurance. Failure to carry the necessary insurance can result in fines and open the company up to claims from injured employees.


Why is Worker's Compensation Insurance Provided?

Worker's compensation insurance exists because workplace accidents occur. Workers' compensation is usually the "exclusive remedy" available to an injured worker. If an employee is injured, they are guaranteed payment for their care, treatment, and a percentage of their lost wages. In return, the employee waives their right to sue their employer for negligence. This system ensures that medical bills and lost wages are paid on time without delays or legal proceedings. Employees can return to work faster, and employers can operate without fear of legal action.


Worker's Compensation: An American Coverage with German Roots

Since the late 1800s, various US states have implemented worker's compensation laws. However, the original concept appears to have originated with German Chancellor Otto von Bismarck. According to the United States Social Security Administration, von Bismarck is also responsible for the foundations of social care for the elderly, which we now know as Medicare and Social Security income.


Long-term disability benefits were also available under the German system.

All individuals and organizations were required to participate.

The employee, the employer, and the German government all contributed to the program.


In the United States, no federal law requires employers to maintain worker's compensation insurance, but most states do. Pricing is typically determined by the employee's location, occupation, and the company's claim history. As one might expect, office worker rates are lower than rates for roofers.


Our country's most dangerous jobs have traditionally included:

Mining

Construction

Roofing

Logging

Metal Working

Aircraft piloting and maintenance, Etc


In general, worker's compensation is more expensive for businesses in these industries. Even so, a workplace injury can happen at any job! Hospital employees can trip and fall over extension cords, biology teachers can cut their hands open by accident, and even a banker can step on a freshly waxed floor and end up filing a worker's compensation claim. Accidents do occur!


Modern Worker's Compensation Insurance in the United States

If you have employees, you must typically carry workers' compensation insurance. There are a few exceptions, such as single-member LLCs or locations where it is not required. Workers' compensation insurance, on the other hand, may be required by a contract you have with a client, even if it is not required by law.


Most employees who are injured on the job will receive medical treatment as well as, in some cases, ongoing payments to compensate for long-term disabilities. Injuries can be acute, such as from a slip and fall, or they can develop over time, such as with a repetitive stress injury like carpal tunnel syndrome.


Are auto accidents covered by worker's comp?

In most cases, injuries sustained on the way to or from work are not covered. However, if an employee is on company time when an accident occurs, the injury is usually covered.


There are a few exceptions, such as when an employee is on a break or running a personal errand related to their job. For more information on when coverage applies, speak with an experienced insurance agent.


Employers Must Comply

There are two ways for an employer to comply with state regulations regarding workers' compensation coverage. The majority of organizations opt to purchase worker's compensation insurance from a private insurance company. Large corporations and government agencies may prefer to self-insure. In that case, they would keep substantial funds on hand to cover employee medical care and wages in the event of a workplace injury.


It is critical to understand who your worker's compensation insurance covers and who is not. Certain company members, such as the owner, are frequently excluded. Contact your broker to learn more about workers' compensation insurance and how you can protect yourself, your employees, and your company.


We are pleased to provide worker's compensation insurance for New Jersey businesses of all sizes and types at Retcho Agency. We work with a variety of carriers and can assist you with all of your commercial insurance needs, including group health insurance, general liability, professional liability insurance, employee benefits, umbrella insurance, and more. Contact us today.

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