Insurance vs. Injury Compensations

It is imperative to distinguish the difference between the two terms listed in the title if you are an employee or a business owner.
Many small firms have owners who are not informed well enough often think that the workers’ compensation is the same as other types of insurance related to other forms of disability. This is because of the constant battle between cost control on one hand and benefit on the other. The key is to understand this difference because then these business owners ensure that all the money spent on insurance is spent wisely and offers the most benefit.
The Oxford Dictionary provides this definition to the term “insurance”:

1. an  arrangement by which a company or the state undertakes to provide a  guarantee of compensation for specified loss, damage, illness, or  death in return for payment of a specified premium: many  new borrowers take out insurance  against unemployment  or sickness, the  business of providing insurance: Howard  is in insurance, money  paid for insurance: my  insurance has gone up, money  paid out as compensation under an insurance policy: when  will I be able to collect the insurance?

2. a  thing providing protection against a possible eventuality: jackets  were hung on the back of their chairs, insurance  against an  encounter with air-conditioning[count noun]:a marquee was hired as  an insurance against the  weather

On the other hand, the same dictionary defines the term “compensation” like:

1. something,  typically money, awarded to someone in recognition of loss,  suffering, or injury: he is seeking compensation for  injuries suffered at work[as modifier]:a compensation claim, the  action or process of awarding compensation: the  compensation of victims, something  that counterbalances or makes up for an undesirable or unwelcome  state of affairs: the grey streets of London were small  compensation for the loss of her beloved Africa[count noun]:getting  older has some compensations

2. the  process of concealing or offsetting a psychological difficulty by  developing in another direction.

3. chiefly North  American the money  received by an employee from an employer as a salary or wages: send  your CV and current compensation to Executive Search Consultant

So, basically, as stated above, insurance is “a guarantee of compensation”. Insurance therefore is a much broader term.
For example, in Texas, all business owners have to buy the compensation for their workers from an insurance organization that is not related to the business itself. All of the people applying for the job require this sort of insurance and the clients/customers often desire to see proof that the company/business has this sort of insurance. If a Texas company wants to take part in any sort of government project, they are obliged to have this workers’ compensation.
On the other hand, there is a major difference between the compensation for employees, provided by the employer, and so called social security disability insurance. The former is generally given to workers from their beginning of work in a particular company. The latter is obtainable only after working for a significant amount of time for either one or many companies. The other very important difference is that the workers’ compensation covers only injuries that happened within the workplace. Social security covers injuries that happened anywhere else. Yet another difference between the two considers administration. Social security covers, naturally a much broader territory. For example, in the USA, individual states manage workers’ compensations, while the plan for social security considers the entire nation.

There is yet another difference when workers’ compensation is compared to the private temporary disability insurance. The latter pays both the medical expenses and the monthly salary when a certain worker is unable to attend work. The difference is almost the same as above. While the worker’s compensation covers accidents within the workplace, the disability insurance covers accidents that happen both the workplace and away from it. However, this kind of insurance is not present in all countries.

Finally, it is important to state that it is highly advisable to all business owners to acquire either the workers’ compensation or this private disability insurance, because they are very important for the well being of the employees and if one should neglect to do so, the consequences can be severe for both the employer and the employees. The best case scenario is that the business owner acquires both. That way he and his employees can work with less stress, which generally improves the workplace itself and the productivity of the company.