What Is Workers Compensation Insurance?

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Return To: Workers Compensation Insurance – The Ultimate Guide

The premise behind workers’ compensation coverage is the fact that employees can always get hurt, no matter what business you run. As a business owner with at least three employees, you need to protect your people in order to protect your business.

Standard workers’ compensation coverage benefits include medical treatment, disability benefits, ongoing care, missed wages, and funeral costs. These insurances are meant to be no-fault coverages that you, as an employer, provide for your employees.

Failure to provide workers’ compensation insurance may have you facing financial penalties, felony charges, misdemeanors, or imprisonment. Your best course of action is to understand the ins and outs of what is workers’ compensation insurance and what does it cover. 

The Standard Workers’ Compensation Insurance Policy

Workers’ comp coverage is only one of the two parts that make up the Standard Workers’ Compensation Insurance. Employers’ liability is the second part of this equation.

Workers’ Compensation Insurance Coverage

The first part of the policy discusses your statutory liabilities, as an employer, concerning workers’ compensation laws. Insurance carriers must the pay actual costs that your employees incur within your workplace for the following cases:

• Medical bills: Should your employee face medical expenses from a work-related illness or injury, workers’ comp coverage helps you cover hospital fees. Coverage includes, but is not limited to, emergency room charges, prescription medicines, and necessary surgical procedures due to critical accidents.
• Rehabilitation costs: When your employee’s work-related injury requires more than one treatment due to its severity, workers’ comp coverage helps you pay the necessary fees for ongoing care or rehabilitation. Physical therapy for employees engaged in heavy lifting is one example.
• Lost wages: Should your worker need time to recover from their work-related injury or illness, workers’ comp can cover their lost income. Note that workers’ compensation coverage does not cover the full amount of lost wages, only a portion.
• Compensation for past, present, and future economic loss: In cases when your employee is rendered permanently disabled due to a workplace incident, they can get compensated for the damages. This is because the incident limits your employee’s ability to earn wages, validating the need to compensate lost future earnings.

Should your employee pass away, workers’ compensation coverage will have the insurance carrier compensate the dead employee’s family or their heirs with the following benefits:

• Funeral costs: Workers’ compensation coverage helps pay the necessary fees for your employee’s funeral, including the memorial service, casket, and burial vault. In North Carolina, the average cost of a direct burial is about $2,700.00.
• Legal fees: In certain cases, workers’ comp can cover the legal fees to pay wrongful death attorneys. As there is virtually no limit to part one of the workers’ compensation coverage, insurers may cover the average costs of wrongful death settlements, which range between half a million to a million dollars.
• Death benefits: Workers’ comp insurance can provide coverage for the money that goes to your deceased employee’s beneficiaries. Should a beneficiary decide to claim a sum, it must prove to the insurer that the beneficiary is connected to the deceased employee and that the employee has such coverage.

Employers’ Liability

The second part of the workers’ compensation policy protects you, the employer, from potential lawsuits that your employee may present. You might face lawsuits for work-related injuries or diseases contracted within your workplace:

For instance, your employee may file a lawsuit against your business if workers’ comp does not cover their coronavirus claim. 

Unlike the first part of the workers’ compensation insurance policy, Employer Liability has three limits, further divided into three separate limits:

• Bodily Injuries (For each incidence)
  • Statutory Limit: $100,000.00
  • Increased Limit (1^st Option): $500,000.00
  • Increased Limit (2^nd Option): $1,000,000.00
• Bodily Injuries by Disease (For each incidence)
  • Statutory Limit: $100,000.00
  • Increased Limit (1^st Option): $500,000.00
  • Increased Limit (2^nd Option): $1,000,000.00
• Bodily Injuries by Disease (Policy Limit)
  • Statutory Limit: $500,000.00
  • Increased Limit (1^st Option): $500,000.00
  • Increased Limit (2^nd Option): $1,000,000.00

The changes you make for your business and employees due to COVID-19 is only one modern factor that needs attention. You will need to stay on top of current events and adjust your processes accordingly to stay protected. You can read more of our blogs about workers’ compensation for more information.

North Carolina Industrial Commission Notice to Employers

The standard rule on workers’ comp is that you must purchase such insurance if you own any business with at least one employee. In the state of North Carolina, the minimum number of workers needed for your business to face consequences is three.

The NC Industrial Commission clarifies that all businesses that employ three or more employees must obtain workers’ compensation coverage. Such businesses include industries that operate as sole proprietorships, limited liability companies (LLCs), partnerships, and corporations.

If you qualify as a self-insured employer, you are required to get insurance plans for the purposes of paying your workers’ compensation benefits.

Exceptions to this requirement include:

• Employees of certain tracks or railroads.
• Casual employees, or persons whose employment does not directly relate to your trade, business, occupation, or profession.
• Household helpers or domestic servants who are directly employed by a family.
• Vendors of agricultural products. This refers to persons selling on behalf of the producers, as an act of commission or another form of compensation from the producers, so long as these vendors sell products prepared by the producers themselves.
• Farmers or agricultural laborers, particularly when one employer regularly employs fewer than 10 full-time and non-seasonal farmworkers.
• Employees of North Carolina’s federal government.

If you call your employees “independent contractors,” you, as an employer, are not relieved of your liability under the Act.

The Industrial Commission may investigate the control you exercised over the details of your trade to determine whether your “independent contractors” were still employees.

Conclusion

Workers’ compensation coverage is necessary for your employees and business, regardless of its nature. Get a quote today for the workers’ compensation coverage you need to protect your staff and your business.