Workers Compensation

You do as much as you can to keep your employees safe while they are on the job. However, when you least expect it, an accident can occur. It only takes a single on-the-job injury to sideline one of your employees for several months. This can lead to severe financial adversity. Because fault is irrelevant when it comes to injuries in the workplace, you may be liable for the employee's injuries.

Fortunately, it is possible to protect your business from associated lawsuits and your employees from the loss of income that may result. Workers compensation insurance will protect the key players of your team, which are your employees. You rely on the people who work for your company to provide service, expertise and knowledge to keep your business flowing. Likewise, they rely on you the business owner to make sure that they will be taken care of when the unexpected happens.

Explanation of Coverage

In most cases, an injured employee will receive workers compensation benefits regardless of who was responsible for the injury. Since such benefits are a type of insurance, they prevent the employee from taking legal action against their employer for the injuries covered by the insurance policy.
This type of protections is designed to even cover any injuries that result due to the carelessness of an employee or employer. Even though the range of situations and injuries that are covered by workers compensation is wide-ranging, yet there are some limits of which you should be aware.

For example, an employee may be required to submit to alcohol and drug testing. If the tests indicate that the employee was under the influence when the injury occurred, the workers compensations benefits can be denied. In addition, if the employee's injuries were self-inflicted, occurred while the employee was in violation of company policy or the law, or while the employee was not performing job related tasks the benefits may also be denied.

Even though the payments may be modest, this type of insurance generally covers a wide range of expenses, including:

  • Retaining costs
  • Income replacement
  • Medical treatment for illness or injury
  • Permanent injury compensation
  • Survivor benefits for the employees families in the event of a fatality

Keep in mind that if the employee collects the benefits from workers compensation, he or she is prevented from taking legal action against the employer. In addition, pain and suffering is not covered by the benefits.

The income replacement awarded to the employee is generally two-thirds of their average wage. However, the benefits will not exceed the set maximum. The benefits provide the employee with a fair wage, thus they should not have to worry about major financial problems while recovering from illness or injury. The loss of income benefits are typically paid following a few days of missed work following the covered incident.


If an employee is injured or becomes ill on the job, the benefits will cover their medical expenses. The expenses that are covered include:

  • Blood tests
  • Doctor visits
  • Emergency room care
  • Hospital stays
  • Imagining, such as X-rays
  • Rehabilitation treatment
  • Transportation to appointments

Although the guidelines and regulations may vary according to region, appropriate and necessary medical treatments recommended by a physician that are in connection to the work related condition are usually covered by workers compensation.


If an employee is permanently disabled and no longer capable of performing the job, they become eligible for a larger lump-sum payment or long-term benefits. The amount that the employee receives is based on the extent and nature of their injuries.

Because benefits for a permanent disability are rather complex, a long time is usually necessary for processing. Therefore, it is important to notify the workers compensation office as soon as possible.


The rules for workers compensation vary from one state to the next. The differences can be great, so it is critical that you understand the rules that apply to your state to protect yourself as a business owner. Some areas may not require workers compensations, while others do. In some cases, requirements for coverage depend on the number of employees that you have working for your company.

In addition, for some states that require workers compensation insurance, there may be exemptions. Some of the most popular exemptions include agricultural employees, corporations and exempted members of companies with limited liability.


Each year, states categorize the various industries. Risk is assessed in each state on the basis of actuarial calculations. Usually, the states will follow the National Council on Compensation Insurance, or NCCI, in order to determine the rate and classification.

The premium rate for workers compensation is calculated by multiplying the rate by every $100 of payroll by experience. The most critical variable of this equation are the rate and the experience modifier. The final premium is a multiple value that is applied per $100 of payroll.

The rates are based on a large number of factors. The National Council on Compensation Insurance classifies clerical work as 8810, which is usually the lowest. The highest are generally the classifications for employers in the construction industry, especially the carpentry industry at 5645. The reason for this is because the risk is higher for someone working on a carpentry job that it is for someone working in a position of office administration.

Another critical part of rate calculation is the experience modifier, or MOD. This is the numeric representation of a company's claim and loss history. States calculate it differently. Generally, a new company will have an experience modifier of 1.00. If claims history is high, the number will rise.

Regardless of the lengths that you go to in order to keep your workplace a safe environment for your employees, accidents are likely to happen at some point. Workers compensation will protect you from lawsuits and provide monetary compensation for loss of income, medical expenses and rehabilitative services. If you own a business that has one or more people working under your employ, then you need to make sure you have the best workers compensation policy in place to protect you should an employee become ill or injured while on the job.