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Workers comp insurance coverage is the
Prior to federal and state workers' compensation legislation in the United States,
employees who were injured on the job had no formal system in place to compensate
them for injuries sustained while working for an employer. The only recourse for the
injured employee was to sue the employer under civil or tort law. Furthermore, the
employee would have the burden of proving employer malice or negligence. Even though
the employers potential liability was limitless, most courts in the U.S. typically
ruled in favor of the employer. This left employees to cover their own expenses
including lost wages, medical costs, and lost future earnings.
Originally, the federal government assumed that workers
compensation laws should be
left to individual states to enact. But in 1908 President Taft signed the first
legislation requiring mandatory employer coverage for employees working in
multi-state commerce. Over the next 40 years each state enacted their own
state-specific programs and work compensation laws. Wisconsin was the first state to
establish a formal workers comp program and Mississippi was the last state.
State regulations determine workers compensation
requirements for employers in each
state. However, every state requires that employers pay for the coverage. They can
purchase it through private insurance companies or through state insurance funds.
Most states also have additional injury funds established to pay for injuries of
uninsured employees under certain circumstances.
Legally requiring workers compensation coverage brings advantages to both employers
and employees alike. The basis of the legal system is built around the Prussian
concept of "no fault" insurance. This concept generally means that on the job
injuries are an accepted fact of business and the workers' compensation system is
designed to manage the financial consequences of accidents in the most efficient and
judicious manner possible. The concept of no-fault eventually expanded into auto
insurance as a means of limiting litigation for each accident.
The primary benefit for employers participating in a state workers compensation
program is that they have tort exemption for injuries that are covered under a
workers compensation policy. The insurance company will pay the cost of lost wages
and medical benefits for employees injured on the job.
Employees benefit from an employer's workers compensation policy because claims are
not based on proving negligence or employer liability. This means that employees may
receive compensation for injuries that occur through their own carelessness or
occupational exposure without any burden of bringing a suit against their employer.
Under the current workers compensation system, employees receive compensation more
quickly and more often than employees without access to workers comp coverage.
Since workers compensation systems are administered by each individual state, there
may be important differences in how each state interprets laws and statutes
regarding coverage and benefits. The federal government also administers its own
system for federal employees and utilizes its own set of rules and requirements for
Business owners and employers that do not carry workers compensation insurance
(except for Texas) often face stiff fines and penalties for not maintaining comp
coverage. Additionally, they will be responsible for paying for any lost wages and
medical expenses for injured employees if they fail to provide coverage.
Workers compensation coverage is not a perfect solution. In fact, it can be somewhat
confusing because of individual state laws and statutes. However, it is still an
American success story. It is a much better system than the United States had prior
to modern workers compensation legislation and reform. Employers now receive instant
relief from employee law suits (known as exclusive remedy) and employees get a fast
and equitable, no-fault program for relief from on the job injuries.
Call One of our Workers' Comp Specialists at 888-611-7467, or
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All states now have exclusive remedy rules that apply to workers compensation
statutes. This provision protects employers from being sued by employers for work
related injuries. Most states limit the employees legal options to a workers
compensation claim against the employer.
The ideal behind the exclusive remedy clause is to force compromise between
employers and employees. Employees give up the ability to to win large suits against
employers in order to receive fast and limited financial return. Employers exchange
liability regardless of fault, for legal protection from potentially devastating
tort judgments in court.
In some instances where gross negligence is likely, most states will allow legal
proceedings against employers regardless of exclusive remedy rules in the state.
Workers compensation insurance is managed separately by each state in the
U.S. Our agency helps business owners find more affordable employers
liability insurance by shopping coverage with insurance companies that offer
lower rates and more policy credits for coverage.
Private insurance companies have different appetites and underwriting
guidelines depending on their performance in each state. Workers comp rates
and pricing can vary tremendously from one carrier to the next. We want to
help you find the very best deal on coverage in your state.
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