Workers Compensation Insurance

Workers compensation Insurance laws were put in place in 1923 to protect employees who might be injured due to an accident, while on the job. The law allows the injured person to receive medical benefits and wage replacement while recuperating from an injury. The original law was voluntary on the part of the employers, but the law has since become mandatory.

Workers compensation insurance is no fault insurance coverage. Employees are covered under workers compensation laws and in return employees cannot file a law suit against the employer in the event of an injury. Employees who are not able to continue to work because of certain conditions related to an injury or industrial disease may be eligible for partial payments.

All states, but Texas, require all companies, no matter the size of the company, too have workers compensation insurance in place to cover all the employees in the event of an accident that results in injury. Workers compensation insurance also provides death benefits to the surviving spouse or dependents. Texas opted to return to the original workers compensation law of 1923. Even though workers compensation insurance is a Federal Law, each state has different laws regulating the application of the federal laws. Each state has the option to regulate the length of time benefits can be collected and the maximum amount of benefits that can be collected.

Company owners who have no employees are not required to have workers compensation insurance, but can choose to have workers compensation in place for themselves in the event of injury. Some states exempt employees with less than 5 employees from having workers compensation insurance, but it is wise for any business in the exemption range to have insurance as protection against litigation that may arise as a result of an employee injury. Check with the state your business is located in for specific regulations that may apply.

Workers compensation insurance is secured through a certified insurance under writer. This insurance is separate from any other business related insurance the company may have. Claims and benefits are regulated through the measures put in place by the state and the individual insurance policy.

Another option allowed in some states is for businesses to self insure the company to cover the costs of employee job related injuries and death. That decision is usually based on the financial stability of the business rather than a hedge against a claim being made.

Workers compensation premiums are based on each $100 of payroll. The compensation is calculated according to the risk involved for the job each employee has. A low-risk occupation such as a clerical position may cost about $0.30 per $100 of payroll. An employee who may work beyond the walls of the company will be considered a higher risk employee and a higher cost for workers compensation will be calculated on the higher risk. A contractor may cost about $12 per $100 of payroll. A roofer may cost about $25 per $100 of payroll.

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