The compensation laws impose on the employer an exposure to loss which is usually transferable. The risk of an employer being sued by an employee for negligence of the employer has been eliminated in most, but not all, cases. It is estimated that 90 percent of all employees fall within the scope of a workers’ compensation law.

Workers Compensation laws give employees the right to collect from their employers for injury, disability or death that occurs in the course of employment. Most of the laws provide coverage for “accidental occupational injuries arising out of and in the course of employment”. The term accidental is intended to eliminate self-inflicted injuries. Some laws go further to say that if the injury occurred while the employee was intoxicated or had willfully disregarded safety rules, recovery is disallowed. The trend of the laws and court decisions has significantly eliminated these last two exclusions, usually reasoning that the burden rests on management supervision.

The term occupational injury probably means a fortuitous, unexpected event, definite in time and place. While the intent may be clear, the laws are not. Prior to the addition of coverage for occupational disease, in most jurisdictions, numerous problems of coverage arose and decisions required the time of the courts or appropriate administrative agency. At the present every state extends the benefits of the law to cover occupational disease which is defined as “ an injury arising out of employment and due to causes and conditions characteristic of, and peculiar to, the particular trade, occupation, process or employment, and excluding all ordinary diseases to which the general public is exposed”. Among other conditions, heart attacks have presented difficult problems of interpretation.

The types of benefits provided for in the laws may be divided into four groups:

* Medical Benefits - Every law provides for the payment in kind of medical, surgical, nursing, and hospital benefits. Most states place no limit, other than expenses necessarily incurred, on the amount of such benefits. A few states place limitations on the amount and / or time over which medical treatment must be furnished.

* Income Replacement - The second fundamental purpose of the laws is to provide the injured employee and his family with a degree of weekly income while disabled as the result of covered injury or disease. The disability income level and duration varies depending upon: (1) total or partial disability, (2) employees average weekly wage level, (3) maximum duration of benefits stated in the law, (4) maximum aggregate dollar limits, and (5) waiting periods.

Total and Partial Disability. In general, one is totally disabled when unable to perform the important duties of his occupation. For benefit purposes, total disability is subdivided into permanent and temporary. In the case of permanent disability, there is an assumption that the injured employee will not be able to work again. Some laws specifically state that the loss of both eyes, both legs, or both arms shall constitute total and permanent disability but it is not limited to these specified losses. Temporary disability is that situation in which the facts indicate that the employee will be able to return to work at some future time. Weekly income benefits are usually the same for both permanent and temporary disability.

Partial disability means that the employee can perform some but not all of the important duties of his occupation. Again, there is a subdivision of permanent and temporary.

* Death and Survivors’ Benefits - The laws provide that actual funeral expenses will be paid up to a maximum dollar amount. The burial allowance limits range from $ 500 to $ 1,500, with $ 1,000 as typical. In addition, all states provide income continuation for the widow and children of the employee whose death is work related. As in the case of disability, this weekly income amount is based on a percentage of the average weekly wage of the deceased, subject to minimum and maximum dollar limits. Children’s benefits terminate upon the marriage of the children or when they reach the age of eighteen. The widow’s benefit ceases upon remarriage and her benefits are usually subject to an aggregate dollar limit. About a third of the states express the limit in maximum number of weeks the survivor’s benefit will be paid. In such cases, 500 weeks is typical.

* Rehabilitation benefits include medical rehabilitation, such as physical therapy designed to improve physical functioning, and vocational rehabilitation, such as retraining for a different occupation. Workers compensation rehabilitation benefits usually pay any reasonably justifiable expenses for these purposes.

It is important to remember that the benefits, as provided by the law, represent a right of the injured employee. The burden of proof is not on the employee to show that he is entitled to them but rather rests with the employer to demonstrate the cause why the benefits should not be paid. In most cases, benefits are paid by private insurance companies under contract with employers in accordance with requirements of the state laws. In a few states, the benefits are paid from state insurance funds - in effect, state-owned insurance companies. If you get hurt on the job, or if conditions at work damage your health, chances are about nine to one you’ll be eligible for workers’ compensation benefits. That’s roughly the proportion of U.S. employees who are covered by workers’ compensation insurance plans set up by laws enacted in every state and jurisdiction of the United States.

Please note that the precise coverage afforded is subject to the terms, conditions, and exclusions of the policy as issued. This explanation is intended only as a guideline. This information is not intended to be considered investment, tax or legal advice. It is provided, for your education only. This is not an insurance contract. All terms and coverages are defined solely by your policy.

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