What is Workers’ Compensation Insurance What Does it Cover?

California law requires that employers carry workers’ compensation insurance. There are very few exceptions, and under new law coming into effect on January 1, 2017, these exceptions are shrinking. As insurance premiums can be significant, it can be helpful to understand exactly what workers’ compensation is designed to achieve, and what it may or may not cover.

Workers’ compensation insurance is designed to pay for any work-related injuries or illnesses sustained by your employees. As with any other insurance system, your monthly premiums will cover certain types of workers’ compensation claims from your employees. Your employees’ hospital and medical expenses that are necessary to treat or diagnose the injury are covered. The insurance will also pay for the rehabilitation and retraining of the employee. The insurance will also cover disability payments. There are several different types of potential disability that would be covered by insurance, including 1) temporary total disability, 2) temporary partial disability, 3) permanent total disability, and 4) permanent partial disability. A doctor will be required to diagnose which type of disability is sustained by the employee.

Perhaps even more important to understand is what is not covered by your workers’ compensation benefits. Of course, these situations may vary and it is important to review carefully the provisions of your individual policy. However, there are several situations that are generally not covered by workers’ compensation insurance. Most commonly, claims for discrimination under 132(a) are not covered by workers’ compensation insurance policies. This is part of why it is so important to avoid taking adverse action due to a workers’ compensation claim filed by an employee. Other injuries suffered by employees may also be excluded from coverage. These situations include intentional actions by an employee, such as if the employee is intoxicated, self-inflicts the injury, or if the employee starts a fight while on the job.  Of course, injuries suffered off the job are also excluded, although in some situations, off the job injuries that are aggravated or exacerbated by on the job actions or injuries may fall under coverage.

If you have questions about the purpose of workers’ compensation insurance or whether your business is required to cover it, call me today at (714) 516-8188. We can discuss your business and its requirement for workers’ compensation insurance coverage.

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