Insurance vs. Workers Compensation: How Do They Differ?

When it comes to workers’ compensation and insurance, employers must follow all state and federal laws for insuring their workers and protecting the workers from financial losses. Proper insurance will provide adequate coverage if the workers are injured while performing their job duties in or within a designated workspace. Supplemental policies are also required to ensure that workers receive wages in extraordinary circumstances when the company cannot operate. Reviewing the difference between worker’s compensation and policies that cover workers explains why the policies are necessary safety nets.

What is Worker’s Compensation Insurance?

Worker’s compensation insurance is required by federal law for all companies that employ more than one worker. It doesn’t matter if the workers are related to the business owner. The law still states that the company must purchase the insurance policy. Any company that fails to purchase and maintain the policy is in violation of federal laws.

Worker’s compensation provides funds to pay for medical expenses whenever a worker is injured on the job. The claims process requires the human resources manager to complete forms for the accident and describe what happened. The worker is sent to the ER with these forms to get a medical assessment. The doctor must submit the medical report to the insurer within ten days of treating the worker.

If the worker is unable to return to work immediately, the insurance provides wage replacement until the worker can come back to work. If the worker develops a condition that prevents them from returning to the same job, the insurance can provide rehab services that train the worker to do a different job. However, all claims are processed by a claims adjuster who decides if the worker is eligible for benefits.

If the worker is turned down for benefits and was eligible, the worker can file a legal claim against the company and the insurer. The policy might provide a settlement offer for the injured worker to prevent a major financial loss for the company. Business owners can review these policies more thoroughly by contacting Paige & Campbell right now.

Disability Insurance for Workers

Disability insurance for workers provides money to replace the worker’s wages if they sustain a work-related injury away from the job site. This indicates that the worker was still performing their job duties at the time of the accident, but they were not within the traditional workplace when the accident occurred. The policy gives the workers wage replacement that is lower than that available through worker’s compensation on a short or long-term basis.

The Disability Insurance policy is a supplemental option for worker’s compensation, but it is not required by law in all states. The coverage doesn’t include medical costs or medical treatment for the injuries. Worker file claims through worker’s compensation to cover medical expenses and treatment.

Unemployment Insurance to Cover Workers

Unemployment insurance is required for all employers, and the program is protected by state and federal laws. It provides wage replacement for all workers who are unable to return to work because of layoffs or circumstances that prevent the company from operating. Unemployment is not available to any parties that quit their jobs voluntarily.

The program provides a portion of the worker’s wages for a period of up to 26 weeks to help them support themselves financially until they can find a new job or their employer hires them back. Workers must file a claim for unemployment through their state to collect the benefits.

With the recent global pandemic, unemployment rates have increased dramatically as fewer companies are fully operational since statewide shutdowns. In the wake of the pandemic, businesses have seen a major increase in unemployment claims. Without the coverage, the business could face hefty penalties through the state or federal government.

Employment Practices Liability Insurance

Employment practices liability insurance covers a company when a lawsuit is filed. Claims for sexual harassment, wrongful termination, discrimination, and any violations of employment law are covered. For example, when a company fails to comply with the Family and Medical Leave Act it may face a lawsuit. If an employer does not cover workers who have sick leave or maternity leave time, lawsuits may come into play.

Businesses that don’t have employment practice insurance policies leave themselves open to a major financial loss if the worker wins their case. Lost claims can damage a company’s reputation and make it difficult to hire workers in the future. The best way to protect against lawsuits and excessive monetary damages due to loss is for companies to purchase and maintain this type of insurance.

Management Liability Insurance

Management liability insurance can provide additional coverage for any workers who are telecommuting. With the recent pandemic, more companies have opted to allow their workers to perform job duties from their homes. However, workers completing vital work tasks from home can present further liabilities to the company and require the company to define new guidelines and rules. It is highly recommended that the company initiate a new telecommuting policy that explains the rules and guidelines for working from home.

First, to be covered by insurance, any property must be inspected for hazards. The worker can’t work in any space that isn’t ventilated properly and free of hazards that could injury the worker or clients that visit the worker’s home. The worker must designate an area within their home as their dedicated workspace and eliminate any hazards from the area. Additionally, the worker must have homeowner’s insurance if they own their home that covers related liabilities or renter’s insurance that covers client injuries or equipment furnished by the employer.

All devices used for business purposes must follow the same IT standards as the company network and have cybersecurity protection to prevent outside access to confidential information. Any devices that are not compliant with IT standards can’t be used for business purposes.

Employers must protect worker’s rights and compensation. Companies must obtain the right amount of insurance coverage to protect their workers and the organization. Any failure to comply with federal or state insurance laws could lead to serious losses for the company or even shut it down entirely. Purchasing the right policies gives the company the protection they need for the business and its workers.