Workers’ Compensation Insurance: An Overview

Workers’ Compensation coverage pays benefits to workers injured on the job, including medical care, part of lost wages, and permanent disability. It also provides death benefits to dependents of employees killed from a work-related accident. Workers’ Compensation systems are different in every state, as individual statutes and
court decisions have shaped the way they handle claims, evaluate impairments, settle disputes, provide benefits and control costs.

Background of Workers’ Compensation Insurance

During the 19th century, the number of individuals joining the workforce grew exponentially. As a result, the number of workplace accidents grew as well. At that time, the only way that injured workers could obtain compensation for their injuries was to sue the employer. Many legislative proposals emerged early in the 20th century, focusing on compensating injured workers for their medical care and lost wages.

By 1949, all states had a system in place to provide compensation for injured employees. Under these systems, the employer was responsible for providing compensation for the cost of medical care and wages lost, and consequently, the employee gave up his or her right to sue the employer for injuries. Currently, Texas is the only state where Workers’ Compensation is not mandated for all employers.

As part of the Workers’ Compensation insurance package, the injured workers’ medical, rehabilitation and lost wages are paid for by the state or insurance carrier. If the injury leaves the employee disabled, the insurance carrier will pay the claim based on the extent of the injuries and based on its permanence. The disability will fall into one the following categories: temporary total, temporary partial, permanent partial or permanent total disability.

Workers’ Compensation rates and programs are managed by private insurers, state funds or the National Council on Compensation Insurance (NCCI). Enforce Coverage Group can provide more information about how your state handles these programs. Contact us today at 212-947-4298.