Workers Compensation insurance, also known as Workman’s Comp and Work Comp, is mandatory in the majority of states. Employers purchase a Workers Comp policy to provide employees with coverage for medical expenses and rehabilitation costs in the event of on-the-job injuries or illnesses. If an employee misses work because of a job-related injury or illness, Workers’ Comp can also provide partial lost wages. In most situations, injured employees receive coverage no matter who was at fault for the injury, and preclude workers from suing employers for the injuries
covered.

Bottom line: Workers Comp insurance protects your business’ assets by shielding you from potential lawsuits, while providing injured employees with medical care and compensation for lost wages.

Each state establishes its own parameters about when an employer must acquire Workers Comp coverage. Some states have a rule regarding the minimum number of employees that an employer has to have in order to be required to purchase Workers Compensation insurance. Other states require Workers Compensation if the employer has any employees at all. States may also exclude certain industries from coverage.

Workers Comp insurance generally covers the following:

• Medical expenses to treat job-related injuries and diseases.
• Lost wages – typically pays two-thirds of the worker’s average income up to a fixed maximum amount if an employee cannot return to work because of his/her injury.
• Ongoing care including surgery, rehabilitation, treatment from specialists, etc.
• Funeral costs & death benefits – if an employee is killed while performing a job-related duty, some policies will cover funeral expenses and provide support payments to the employee’s beneficiaries.

Workers Compensation covers injuries and illnesses that are within the “course and scope of your employment.” The range of injuries and situations covered is broad, but there are limits. States can impose drug and alcohol testing on the injured employee, and can deny the employee Workers Compensation benefits if such tests show the employee was under the influence at the time of the injury. Compensation may also be denied for: self-inflicted injuries; if an employee was violating a law or company policy; and where the employee was not on the job at the time of the injury.

There are several measures your business can take to reduce the cost of Workers Comp insurance, including:

• Understanding how your premium is calculated.
• Enhancing your safety program.
• Implementing an active claims management program.
• Putting into a place a return-to-work program to get injured employees back to the workplace as soon as they are medically able.
• Performing pre-employment testing and vetting.