Workers Compensation

Workers Compensation is a type of insurance that covers the medical expenses of injured workers from work-related accidents and also compensates them for any lost income resulting from work-related injuries.

Injured workers may receive benefits from workers compensation policies regardless of who is at fault for the accident.

The laws governing Workers Compensation insurance vary from state to state. No two states have the same regulations. Each state decides the minimum limits to be paid out by Workers Compensation policies for businesses operating in the state. These are known as statutory limits.

Mixing up requirements for Worker’s Compensation with Employers Liability is a common source of confusion for property managers, vendors, and tenants. The two cannot be used interchangeably. Knowing the difference is crucial to satisfying a property’s insurance requirements.

Understand: Workers Comp. policies come with two parts: Workers Comp. insurance and Employers Liability insurance. Though they come bundled together, they have different limits and serve different purposes.

  • Part 1, Workers Compensation: insurance that covers an employee’s medical expenses and a portion of lost wages from work-related injuries or illnesses.
  • Part 2, Employers’ Liability: insurance that protects employers from employees’ lawsuits over work-related injuries, illnesses, or occupational diseases.

From these definitions, we see that one major difference between the two converages, besides the scope of what is covered, is the role that negligence plays:

  • Worker’s Compensation pays out to claims regardless of whose negligence caused the accident. Whether the employee, employer, or a third party contributed to the conditions that caused that accident, Workers Comp. claims will pay out just the same. This is a no-fault system.
  • Employer’s Liability on the other hand, only pays out if an employee sues the employer for negligence. If some action or inaction by the employer contributed to the accident, then the employee may sue for punitive damages, which would be covered by Employer’s Liability.

While the minimum Employers Liability limits required tend to be decided by landlords, the state government sets the minimum workers compensation limits required for businesses operating in the state. These are called Statutory Limits. The Per Statute box on the Workers Compensation row of a COI indicates whether the policy meets the statutory limits required by the state.

If this “Per Statute” box is left blank or if “Other” is marked, it is safe to assume that the policy does not meet the state’s statutory limits. This does not apply to businesses in the state of Texas, however, as Texas has no statutory limits. Nor does it apply to businesses in monopolistic states like Washington, Ohio, Wyoming, and North Dakota.