Solutions: Workers' Compensation Insurance

Here we'll talk about workers' compensation insurance

Purpose of Workers' Compensation Insurance:

There are two primary purposes to every workers' compensation system: protection of the employee, and protection of the employer.

The workers' compensation system is a trade-off for both parties: employees are guaranteed prompt payment of known indemnity benefits and medical treatment; employers receive the "Exclusive Remedy" provision in return for these guaranteed benefits. The exclusive remedy provides that an employee cannot seek tort damages against the employer for work related injuries or covered diseases. Prior to workers' compensation laws, an employee's only recourse was to take the employer to court and sue for damages under the varied Employer Liability statutes. An employee's loss of such a suit left the employee with nothing to support his family; an employee's winning of such a suit could easily put an employer out of business. The workers' compensation statutes strike a balance for each side of a dispute - guaranteed benefits for the employee, relief from potential tort suits for the employer.

Now that we understand what is referred to as "The Grand Bargain" between employers and employees, lets' take a minute to understand the policy and what is covered by each section. While the actual coverages are the same

All policies are broken into 2 separate sections, as to coverages. They are identified as Part 1 and Part 2. The actual coverages provided are the same for all states, but each state has their own set of definitions, requirements and benefit levels. So, let's see what's covered where:

Part 1: This section provides for the payment of the cost of medical care and rehabilitation from those injuries. There is no limit for the cost of medical care, but there are limitations as to the benefit levels for disability. Within the definition of disability, there are 4 groups that and individual could fall into:

Temporary Partial Disability
Temporary Total Disability

Permanent Partial Disability
Temporary Total Disability

Part 2: This section provides for coverage for Employers Liability Insurance. This protects the employer against lawsuits arising out a work-related injury not covered by Part 1 of the policy. Examples of these potential actions are:

Consequential Bodily Injury: An example of this would be a lawsuit filed by a family member for injuries suffered as a consequence of the employee's injury. Suppose, a husband were to get severely injured in an on-the-job injury and the spouse suffered a heart attack upon learning the news.

Dual Capacity: An example of this would be a lawsuit brought by the injured employee or his family against the employer where the injury is sustained via a product that was manufactured by the employer. If the injured employee suffered the injury in an accident on a ladder that failed and was manufactured by the employer.

Loss of Consortium: An example of this would be a lawsuit brought by the injured employee's spouse for the loss of services.

Third Party Over Actions: An example of this would be protection from lawsuit by a third party who was held liable for an on-the-job injury. This could be a lawsuit brought by a manufacturer of a piece of machinery by which the employee was injured on, but out of gross negligence, had not been properly maintained by the employer.

One important distinction of Part 2 - Employers Liability has a set limit of liability. The standard limit in The State of Florida is:

Bodily Injury by Accident $100,000. Each Accident

Bodily Injury by Disease $500,000. Policy Limit

Bodily Injury by Disease $100,000. Each Employee

These limits can be increased via endorsement for an additional premium.

Pro's:

Fulfills the obligation for complying with state statute for worker's compensation.
Provides coverage in an umbrella like fashion for all employees, casual labor and subcontractors.

Con's: