What is Workers Compensation?

Have you ever wondered WHAT WORKERS' COMPENSATION MEAN?

In this video, we are going to give you a brief explanation of Worker's Compensation policy.
If you have any questions, please leave a comment below.

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Workers Compensation and Employers Liability

Before we begin, it Is important to understand that WC policy is unlike the other policies we studied so far. It is actually a national program and in most states the law requires that employers carry Workers Compensation, meaning that in most states is not optional. So when referring to you will most often hear it being characterized as being statutory. This is just in reference to the laws and and regulations surrounding Workers Comp. For example there is the term “ statutory limits”. For most other coverages like GL, excess liability and the ones we have already seen so far, the company actually gets to choose the amount, the limits, details of the coverage, but WC is different. The amount of coverage is mostly dictated by the state of where the company is the history of how Workers Compensations actually came to be.

The government created a social insurance program to protect both the employees and the employers. Employee gets compensated for injury and gets medical expenses taken care of and employers don’t have to risk huge incentives. It’s a win-win.
So statutory workers compensation is a no fault system, meaning that the employee dooesnt have to prove that the employer is at fault to receive benefits. In many states, employers pays for Workers Compensations with insurance premiums paid to wide WC funds. And in other state employers are permited to self insured and pay the claims themselves.

Why do we need Employers Liability?

It’s very rare to have a employers liability claim since the state statutory compensation are very strict and employers doesn’t have to fear lawsuits. However, WC doesn’t cover everything.
IRM defines workers compensations as “ an insurance policy that provides coverage for an employer’s two key exposures arising out of injuries sustained by employees”. Although almost grouped together in some states, employers are allowed to opt out of the coverage all together or to purchase the coverage separate.

Here are the 2 key risks exposures:

Part 1 of the policy Workers Compensation covers the employers statutory liabilities under workers compensation law . It’s a policy that offers benefits as determinate by the state to an employee due to jobs relative injuries resulting from an accident or occupational disease such as medical expenses, loss wages. This policy also includes death benefit, with the benefit being transferred for the employees family. Again a lawsuit or a prof of negligence is not require in order to obtain workers comp. benefits.

Part 2 is the employers liability coverage – which covers liability arising out of an employee work relative injury that are not coverage by the workers compensation. Employers liability lawsuit typically envolves one or more of the following claims:
Third party over action, loss of consortium, consequential bodily injury, dual capacity suits, or more. (6:37)

On a certificate an agent needs to indicate whether or not the workers comp. policies applies on a per statute or OTHER. This indicates whether or not the WC policy meets the state requirement. Here are some examples that the OTHER box would be checked:

1) The coverage exceeds state requirements
2) The state does not have requirements for Workers Compensations. Most often seen in monopolistic states.
An agent should also includes a YES OR NO in the exclusion box where indicates whether or not there is employees exclusions on the policy.

Thanks for watching

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Timecodes:

0:00 - Intro
1:38 - Why do we need Employers Liability?
1:55 - Workers Compensation definition
2:08- Workers Compensation coverage
2:48- employers liability coverage
3:19- Indicators on Certificates