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Workers Compensation

From small businesses to major corporations, running a company with employees requires worker’s compensation insurance.

While state laws vary regarding specific requirements, federal law mandates the coverage which provides medical care benefits to employees incurring a job-related injury or illness. Businesses that do not purchase worker’s compensation insurance face fines, criminal charges, and lawsuits.

Some states vary coverage requirements by:
business size
business structure
business payroll

The NFIB website provides a synopsis of the state-by-state requirements. For each state, it includes a link to the appropriate state workers’ compensation organization. The federal government has its own program for federal employees.

Workers’ Compensation Insurance Coverage

This insurance pays for the medical treatment of an employee who suffers a job-related illness or injury regardless of the at-fault party, whether the employee, employer, a co-worker or customer, or a third-party. It also covers disability payments to an employee while unable to work, usually about two-thirds of the employee’s salary.

Workers’ compensation insurance does have limits to coverage. It won’t pay in cases where:
an employee was using illegal drugs or intoxicated,
self-inflicted injuries,
injuries incurred while a worker committed a serious crime,
injuries incurred when an employee was not working,
injuries suffered when an employee violated company policy.

However, the employee need not be in the workplace for coverage to apply. Workers’ comp insurance covers injuries incurred during business travel, while conducting a work-related errand, or attending a required business-related function, such as a business dinner, conference or meeting.

Types of Injuries

This insurance covers both sudden and repetitive injuries. It covers sudden onset and long-term exposure to illnesses.

For example, an injury caused by a fall from a ladder and a repetitive injury such as carpal tunnel syndrome are both covered. A severe allergy attack caused by new cleaners or a substance required to complete your job duties and emphysema caused by workplace asbestos exposure are both covered.

Check your state’s workers’ compensation insurance requirements to learn the amounts you need and whether your business requires it.