Workers Compensation Insurance

Workers' compensation benefits are provided to workers who are injured on the job or who have a work-related illness or condition. Workers' compensation offers wage replacement benefits for partial, permanent, and temporary disabilities, medical treatment, and death benefits to a worker's family if a worker is killed while performing their normal job responsibilities.

Workers' compensation was created to eliminate the need for injured workers to seek legal remedies for work-related injuries by filing a lawsuit against their employer and proving the employer's negligence was the cause of the their injury. Workers' compensation was also supposed to eliminate the high cost for legal action and eliminate the delay for recovery.

Workers' compensation is considered an exclusive remedy where both parties compromise- the worker gives up the right to sue their employer and the employer pays compensation regardless of negligence with limited liability. Workers' compensation benefits the employer who, if they were found negligent, could be exposed to high and unpredictable settlements. And it also benefits the employee, who receives immediate medical care and wage replacement without having to win a lawsuit.

How does workers' compensation operate?

Workers' compensation is administered by the state, but employers are generally required to either purchase insurance for their employees or self-insure. Insurance benefits are paid for by the employer, although some experts claim payment is also financed by the worker who may end up receiving lower wages. The Social Security Administration notes "premiums written for policies in the most recent years, including payments made under deductible arrangements, and the benefits and administrative costs of self-insurers were estimated at approximately $72.9 billion, but benefits and costs have declined from a peak in the early 1990s."