What is workers compensation insurance? Employers are legally obligated to take reasonable care to assure that their workplaces are safe. Nevertheless, job-related accidents happen. When they do, workers compensation insurance provides coverage. Workers compensation insurance serves two purposes: It assures that injured workers get medical care and compensation for a portion of the income they lose while they are unable to return to work, and it usually protects employers from lawsuits by injured workers.

Workers receive benefits regardless of who was at fault in the accident. If a worker is killed while working, workers comp (as it is often abbreviated) provides death benefits for the worker’s dependents.

Each state is different
Workers compensation systems are established by statutes in each state. State laws and court decisions control the program in a given state, and no two states have exactly the same laws and regulations.

States determine such features as the amount of benefits to which an employee is entitled, what impairments and injuries are covered, how impairments are to be evaluated and how medical care is to be delivered. In addition, states dictate whether workers compensation insurance is provided by state-run agencies and by private insurance companies—or by the state alone. States also establish how claims are to be handled and disputes resolved, and they may devise strategies, such as limits on chiropractic care, to control costs.

To learn about the requirements where you live, visit your state’s workers compensation department website. You’ll find a convenient countrywide directory at a site called “All 50 States’ and D.C.’s Home Pages and Workers’ Compensation Agencies.”

If your business expands to another state, you may have to deal with very different rules in the new state. And you should see your agent for specifics, as it could affect your premium. The discussion here covers the general features of workers compensation programs.

What injuries are covered?
Injuries employees sustain on the workplace premises or anywhere else while the employee is acting in the “course and scope” of employment are covered if their employer has workers comp insurance. For example, the leading cause of workers comp death claims is traffic accidents that occur when the employee is in a vehicle for work purposes, whether the trip is made in a company car or the employee’s own vehicle. Accidents driving to and from work are not covered, except in certain situations.

In addition to injuries from job-related accidents, workers comp covers injuries employees may sustain from other events that may occur while they are working, including workplace violence, terrorist attacks and natural disasters.

Workers comp insurance also covers certain illnesses and occupational diseases (defined in the state statutes) contracted as a result of employment. For example, employees who work with toxic chemicals can be made ill by exposure to the chemicals.

What treatment do workers receive?
Injured workers receive all medically necessary and appropriate treatment. With medical costs soaring, many states have adopted measures designed to rein in expenditures. These include utilization management guidelines, which describe acceptable treatment protocols and diagnostic tests for specific injuries

Also, as a Harleysville workers compensation customer, you can help contain your company’s insurance costs by channeling all injured workers to a preferred medical provider within the CorVel® Corporation network. CorVel is Harleysville’s approved managed care medical partner for workers compensation claims, and its website is www.corvel.com. What benefits do injured workers receive? Income replacement benefits often are based on whether the disability is total or partial and whether it is permanent or temporary.

Impairment is generally defined as a reduction in earnings capacity, sometimes using the American Medical Association’s criteria.

Most states require that benefits be paid for the duration of the disability, but some specify a maximum number of weeks, particularly for temporary disabilities. The benefit amount is a percentage of the worker’s weekly wage (actual or state average). To learn your state’s specific benefit requirements, start by locating its key contact information in “All 50 States’ and D.C.’s Home Pages and Workers’ Compensation Agencies.”

Do I have to buy workers compensation insurance?
In most states, sole proprietors and partnerships aren’t required to purchase workers compensation coverage unless and until they have employees who aren’t owners. Most states will allow sole proprietors and partners to cover themselves for workers comp if they choose to do so. Some states don’t require employees to be covered if they are paid solely on commission.

Employees are generally defined as people performing services at the direction and control of the employer, for hire, including minors and workers who are not citizens.

Many states exempt employers with only a few employees from mandatory coverage laws. The threshold number of employees that triggers mandatory insurance is either three, four or five, depending on the state. Texas is the only state in which workers comp insurance is truly optional.

In some states, businessowners’ immediate family members—parents, spouse and children—who work for the firm may not have to be counted as employees for purposes of determining whether you must have workers comp insurance. These exceptions usually do not apply to other family members, such as sisters, brothers or in-laws.

Under some laws, independent contractors are not considered to be your employees. However, for the purpose of workers comp insurance, most states will treat an uninsured contractor or subcontractor or employees of an uninsured subcontractor as your employee—meaning you may be liable if he or she is injured while working for you. To avoid any unintended liability, larger companies often require any contractors or subcontractors doing work for them to provide proof they have workers comp insurance.

Regardless of whether insurance is required and regardless of how few employees you have, if an employee protected by the state statute is injured or killed in the course of working for you, you may be legally liable. One claim for a serious employee injury could bankrupt many small businesses. Insurance, through the payment of premiums for workers comp coverage, provides a predictable cost for handling this risk.

Questions?
Contact your independent Harleysville agent with questions about any of the information provided in this section—or in other parts of our claims site. Don’t know the name of your company’s agent? Call Harleysville’s customer support staff at 866.577.9040.

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