Frequently Asked Questions
What is Workers’ Compensation Insurance?
It’s basically “on-the-job” insurance for injured workers/employees. It is a form of insurance coverage specifically designed to provide for medical payments and in some cases financial payments to employees who were injured on-the-job. Coverage is only extended to employees who suffer injury, occupational diseases, or work related death in the course of employment while doing some activity that furthers the affairs of the employer.
Workers’ compensation insurance is mandatory in the majority of states in the United States. This insurance helps pay for their medical bills and any other costs associated with the injury.
What is a Compensable Injury?
An injury that arises out of and in the course and scope of employment for which compensation is payable under your state’s workers’ compensation laws.
What is Not Covered by Workers’ Compensation Insurance?
Workers’ compensation covers most, but not all, on-the-job injuries. Worker’s compensation insurance does not cover the following:
- Injuries suffered while an employee is intoxicated or using illegal drugs.
- Injuries caused by a worker who starts a fight.
- Injuries suffered while a worker was committing a serious crime.
- Injuries suffered while an employee was not on the job.
- Injuries suffered when an employee’s conduct violates company policy.
- Willful attempt to injure oneself or another.
- Employees who suffer a heart attack.
- Injuries from repetitious mental trauma.
- Contracting ordinary disease of life.
- Injuries suffered during participation in off-duty recreational activity.
- An incident that arose out of an act of God.
- Employee’s horseplay that produces or causes an injury.
Is Workers’ Compensation Insurance Required?
49 out of the 50 states in the United States require employers to carry some type of worker’s compensation insurance for their employees. The only state that is not required by law to do so is Texas. Many businesses in Texas still choose to purchase this type of coverage, but they are not required to do so.
Are Some Employers Exempted from Workers’ Compensation Insurance?
Even though the majority of states require workers’ compensation insurance for employers, some types of employers are exempt from buying this insurance coverage. For example, some states allow businesses that have fewer than five employees to avoid paying for this coverage. If you are self-employed, you would not need to purchase this type of coverage.
Some companies get out of buying workers’ comp insurance because of the industry that they are in. For example, farms do not have to purchase workers’ compensation for farm workers. Companies do not have to purchase this insurance for independent contractors and real estate brokers do not have to buy it for their agents.