Most states require that employers provide Workers Compensation insurance for their employees. This insurance covers workers for accidents or disease arising from employment as prescribed by state law. Benefits can include lost wages, medical expenses, and permanent disfigurement/disability payments.
Major Components of Workers Compensation
1. Workers Compensation — The policy will pay on behalf of the employer whatever benefits are due the injured employee under the workers compensation law of the state or states designated in the policy declarations. It does not specify the amount of benefits, since the laws change from time to time, so the policy merely says that it will pay whatever the law requires. Generally, it covers medical expenses, a limited amount of weekly lost earnings, and some death benefits to surviving dependents.
2. Employer's Liability — This protects the employer, if for some reason the employee’s injuries are not compensable under the workers compensation act, or if the injured worker can institute a claim for damages against the employer even though workers compensation benefits have also been paid.
3. Employer's Stop Gap Coverage —Some monopolistic states (those where the state is the sole provider of workers compensation coverage) do not include employer's liability in their workers compensation policies. If your business is located in one of these states, you can purchase Employer's Liability Stop Gap Coverage as an endorsement to the state’s general liability policy.