Who Pays Workers' Comp Insurance?
Workers compensation insurance is paid by employers to protect itself from potential lawsuits stemming from their employees becoming sick or injured on the job. This insurance program pays monetary benefits to replace a portion of the employees' incomes while they are recovering from their medical conditions. There are other financial benefits available under workers compensation insurance which, depending on the size of the company, is a required purchase.
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Workers Compensation Insurance
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Workers compensation is an insurance program that pays benefits to workers who are injured or become ill on the job. Each state governs their own workers compensation program. Workers compensation coverage are bought as individual policies, according to the Insurance Information Institute. This type of insurance coverage is a no-fault policy which means that benefits are paid to the injured employee regardless of which party is responsible for the incident.
Benefits of Workers Compensation Insurance
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Workers compensation benefits both employers and employees. For employees, workers compensation insurance typically pays them two-thirds of their salaries and covers their medical expenses. Their surviving spouses or dependents can also receive death benefits as well. For employers, purchasing workers compensation transfers their financial liabilities to the insurers. Also, employees cannot sue their employers for damages if they are receiving workers compensation benefits.
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Considerations
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Employers pay premiums that are set by insurers based on the companies' information. Factors that affects employers' premiums include their payrolls, experience and classification ratings. As a result, employers that are considered high risk occupations, such as roofing and construction, will be charged higher premium rates. However, companies can lower their premium costs by raising their deductible amounts or implementing programs that improve workplace safety.
Misconceptions
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Employees are ineligible for benefits if they are hurt on the job due to being under the influence of drugs or alcohol. They also forfeit their insurance payments if they are injured while committing illegal acts or if their injuries are self-inflicted. Also, not all companies have to purchase workers compensation insurance. Businesses with less than three employees or are financially capable of self-insuring are not required to carry this coverage.
Warning
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Before employees are able to receive workers compensation benefits, they must be examined by doctors. These doctors are contracted by the employers to determine whether the reported medical problems were caused from working and, therefore, make the injured employees eligible for benefits. However, employees can request to see their own doctors, but this must be presented to their employers in writing before any injuries occur.
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