From start-up to established; from zero to 10+ employees – every small business that has employees should consider workers’ compensation insurance. This coverage provides benefits to employees for work-related injuries or illnesses including medical care, wages from lost work time, and more. It also covers a deceased workers’ family with a financial benefit as well. If a workers’ family decides to sue the company, it can also help cover the related legal fees.
Types of Workers’ Compensation Benefits
Workers’ compensation insurance gives your employees benefits if they get a work-related injury or illness. This type of insurance is required in most states, and employers are responsible for buying and providing it to their employees.
Workers’ compensation insurance benefits usually help employees by covering:
- Medical treatments
- Disability benefits
- Vocational rehabilitation
- Death and funeral services
Types of Workers’ Compensation
Insurers don’t typically offer different types of workers’ compensation policies. The workers’ compensation plans you can get from an insurance company or state fund are generally standard in the industry. Although some companies, like The Hartford, offer endorsements that can extend coverage. Additionally, your benefits and coverage requirements can vary depending on the state you’re in.
If your employee gets an injury or illness caused by their work, they can file a workers’ compensation claim to help pay for their medical treatment. This can include helping pay for their:
- Doctor’s appointments
- Hospital and emergency room visits
- Therapy and rehabilitation
- Recovery equipment
To help recover from a more severe injury or illness, your employee may need ongoing care. These costs are usually covered by workers’ comp, but it may not cover some types of alternative care, such as:
- Naturopathic treatment
- Homeopathic medicine
If a work-related injury or illness causes another medical issue for your employee, workers’ comp can still help them. Let’s say your employee injures his ankle after tripping over an office chair. His ankle injury causes him to limp, which leads to back pain. Workers’ comp can help cover his back treatment because it was a result of his original ankle injury.
Sometimes a work-related injury or illness can leave your employee disabled. Work-related disability usually falls into one of these four categories:
- Temporary total disability means your injured employee is completely unable to work for a certain amount of time, but will return to work at full capacity.
- Temporary partial disability means they can work at a reduced capacity without needing time off. For example, an employee who slips in the office and breaks her wrist may be partially disabled and continue to work, but only for half days until it heals.
- Permanent total disability leaves your employee completely unable to work, never returning to their previous role.
- Permanent partial disability means your employee can return to work, but they will never work at the same capacity as they did before the injury.
If your disabled employee has to take time away from work to recover, workers’ compensation can help them recover some of their lost income until they return to work. If your employee has a permanent disability, workers’ comp can give them disability benefits for life. This benefit is different in each state, so make sure you know how disability payments work in yours.
Workers’ comp can help cover your employee’s ongoing care. This includes ongoing physical therapy or vocational rehabilitation to help them learn new skills so that they can return to work in a different role. Workers’ comp can even help cover any new training and certifications.
Your disabled employee may also receive a Transferable Skills Analysis. This helps find other roles for them where they can learn new skills and work with their disability. A vocational counselor is usually assigned to your employee to perform the analysis. These counselors can also help your employee find new training or education. Most workers’ comp programs offer two years of vocational rehabilitation. During this time, your employee can still receive financial benefits for lost wages.
Death and Funeral Services
In the unfortunate event an employee loses their life because of a work-related injury or illness, workers’ comp can provide benefits to their family and beneficiaries. These benefits can help them cover funeral expenses and lost income. Most coverage plans have a limit for these expenses, which varies by state. Your insurance company can deny expenses if they find they’re extravagant or unnecessary.
In most cases, workers’ compensation benefits go to immediate family members or dependents living with your deceased employee, like their:
- Elderly parents
Some states don’t allow children over 18 to receive death benefits, but there may be an exception for children with disabilities.
If your employee takes time away from work to recover from their work-related injury or illness, workers’ comp can help replace some of their lost income. If your employee loses their life, that lost income can go to their family instead. The amount their beneficiaries receive depends on state regulations.
General Liability vs. Workers’ Compensation Insurance
General liability insurance is different from workers’ compensation insurance. General liability helps protect you from claims that your business caused bodily injury or property damage. For example, if a customer slips and falls at your business, general liability can help pay for their medical care.
What Do the Two Policies Have in Common?
Both workers’ comp and general liability policies deal with bodily injury. The law usually requires most small businesses to have workers’ compensation insurance. While general liability isn’t usually required by law, it can still be a good idea to have it. Without coverage, your employees or customers may have to pay for their medical expenses and may file a lawsuit against you to cover their costs. That’s why workers’ comp and general liability are good for everyone: business owners, employees and third parties.
How Do They Differ?
Workers’ compensation and general liability insurance provide different benefits and cover different types of injuries. Workers’ compensation provides coverage to your employees if they get hurt or sick from their job. General liability helps cover third-party injuries, not injuries to you or your employees.
Both insurances cover claims differently, as well. Workers’ comp gives your employees benefits to help them recover from work-related injuries or illnesses. These benefits help cover their medical bills and can replace some of their lost income if they take recovery time away from work. General liability insurance helps cover costs related to claims of bodily injury and property damage made against your business. It also helps cover costs to settle claims of:
- Advertising injury
- Trademark penalties
*Information retrieved from The Hartford.
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