Worker's Compensation Insurance Basics
What is workers’ compensation insurance? When you define this term, it basically means that an employee is insured for protection in case of injury. An employer is required by law to insure his employees in case they get injured or hurt while in the employ of the company. This kind of insurance is usually put into play when an employee is unable to work due to certain injuries they might have obtained while in the company's workforce.
Often known by the term workers comp, workers’ compensation insurance terms differ country to country and even state to state. While the most known workers’ comp is the one enforced by the United States Government, workers’ compensation insurance is also available to workers in Canada and Australia.
Workers’ compensation insurance began in the United States in 1902 in Maryland. It was said that this law was enacted to help lessen the cost of litigation both for the employer and the employee as well as to get rid of the need to provide investigators with circumstances and reasons to show that the injury was, in a sense, placed on the employer's shoulder or they are to blame. Forty seven years later, this law saw different versions of its original being imposed in all the states to benefit both employers and employees. This was originally termed workman's compensation but in the advent of women workers entering the ranks of the employed, a rename was enacted to cover both genders, hence the change to workers’ compensation.
It is an employees right once they are injured while on the job in any part of the United States to receive medical attention that is suited for their type of injury as well as receive some monetary considerations as a form of indemnification should their injuries prove to be serious enough to render them either temporarily or permanently debilitated or disabled.
Since it is a requirement for employers to provide workers’ compensation insurance to their employees, hefty penalties are often used to get these companies back into line. Those companies that do not follow this mandate are usually asked to pay rather large sums of money as a form of punishment for not following this law. Despite this rather strict enforcement, however, some companies do fail to take out policies for their workers, which prompted some states to have a certain failsafe for cases like these. These states have reserve public funds ready in case some unlawful company neglects to buy insurance for the people who work for them.
Most of the companies in the United States purchase their workers’ compensation insurance from private firms. While there are a few states that have state run programs for workers’ comp, they are often only used as a last resort so as not to overshadow these privately owned insurance firms. This last resort kind of workers’ compensation insurance is enacted only when a company is deemed as a high risk company and therefore must be covered using an assigned-risk program, usually under a state run entity or insurance company.
by Maria-Goldsmith 19 years ago