If you’re a business owner, you’ve (hopefully) heard of workers’ compensation. Since this is such a well-known policy, we often get questions about the specifics of carrying this type of coverage. So, I sat down with Marc Millison, Owner and Commercial Account Executive at Risk Averse Insurance, and asked him some of the questions we hear the most. Below are his answers.
What does a workers’ compensation policy cover?
A workers’ compensation policy is a two-part coverage form. The first part being injury, which includes medical, employees injured – a workers comp policy covers 100% of the medical costs. The second part is the lost wages; in Pennsylvania, the employee has a deductible on their wages where if you’re only out seven days, you are not reimbursed any lost wages. You start getting lost wages coverage on day eight, and if you’re out past day fourteen, you retroactively get paid back to day one. So, if an employee is out fourteen days or longer, everything is covered; it’s just a sticky area when it’s only a 7-10 day injury.
Is workers’ compensation required for all businesses?
No; workers’ compensation is only required for businesses with employees.
If you own a business by yourself, then, you don’t need a workers’ compensation policy?
Correct. The statute states that you only need to have workers’ comp in Pennsylvania if you have at least one employee who is not a partner of an LLC or a corporate officer. So, anybody outside of those two classes would be required to carry workers’ comp policy.
Does a general liability policy include workers’ compensation coverage?
It does not. A general liability policy specifically excludes workers’ compensation. It excludes a lot of things; for example, it excludes auto liability, workers’ compensation, flood, etc. The reason it excludes these is that those exposures are better covered on a different form. Workers’ compensation is never covered under a general liability policy.
We’ve had people request certificates of insurance with the holders listed as additionally insured for workers’ compensation. Why is this not possible?
“Additionally insured” is a liability term, and workers’ comp is not a liability coverage. Workers’ comp offers a waiver of subrogation instead. The reason you don’t need to be an additionally insured under a workers’ comp policy is that if your worker is at another business. Let’s just say that you go to a business across the hall to help them out, and you slip and fall. You’re our responsibility as our employee; you got hurt on our time and even though you got hurt on their premises, it’s still covered under our workers’ comp policy. So, a waiver of subrogation states that our workers’ comp carrier can’t go after the other party. In the end, it accomplishes the same thing as additionally insured, but it’s a different way of wording it.
Can an employee receive compensation for an injury that occurred outside of the workplace?
Yes and no. If an employee at an outside event for work such as a company luncheon or they’re out seeing clients, they are technically outside of the workplace. But if they get injured during a company event, they are covered. If they’re out on the weekend playing in a softball tournament and hurt their shoulder, they cannot put it under their workers’ comp.
To clarify, if I were about to drive home after work and I slipped and fell in the parking garage, that would not be covered?
Yes. Once you get to work, you’re covered. So, your rides into work are not covered and your coverage stops once you leave for the day. If you were walking to your car after hours and you slipped, that would not be a workers’ comp issue. You could sue the building owner for general liability if they didn’t salt the area for example, but workers’ comp is during the workday. However, if you reported to work and your employer sent you to go get stamps and you slipped and fell at that time, that’s workers comp since you’re going out on a work duty. After you leave for the day, you’re not covered by workers’ compensation.
What would the consequences be if an employer with one or more employees were to neglect to purchase workers’ compensation coverage and an employee experienced an injury?
The Pennsylvania statute requires employers to pay for injuries to your workers and their lost wages. That’s the law. The reason you buy a workers’ compensation insurance policy is so that you as the employer do not have to bear those costs. Essentially, you pay a work comp carrier’s premium and in the event that there’s an injury, the carrier then pays your employee the medical bills and lost wages. If you did not have this coverage, you would be fined by the Pennsylvania Department of Labor because you’re in violation of a statute. Just because you don’t have workers’ compensation insurance, you are not relieved of your responsibility to pay. You would get fined, and you would still be responsible for covering 100% of their medical bills and lost wages for as long as they needed it. The consequences are pretty severe because you’re still responsible regardless.
How long does an employee have to report a claim in the event of an injury or illness in order to be compensated?
In Pennsylvania, the employee has to notify their supervisor or employer of the injury within 120 days of the occurrence. That goes for physical injuries as well as any disease caused by the work. In addition to that, if the employee’s claim is denied, they have 3 years to file a petition in PA. So, if you are denied and it’s outside that 3 years, you cannot even file a petition. Just make sure you file your petition within a 3-year window if necessary.
Who is eligible for workers’ compensation benefits?
Everyone is actually eligible for workers’ compensation benefits even though the statute only requires employers to provide their employees with coverage. Members of LLCs, corporate officers, and sole proprietors can even buy themselves a workers’ comp policy. So, anyone could be covered by the benefits if the policy is set up to do so.
Are any employee injuries not covered?
All injuries are covered. There are no excluded injuries. Anything that happens while you’re working is absolutely covered under workers’ compensation. This just goes back to the question of whether you were working at the time. If you’re out at lunch on a break and the server spills a hot coffee on you, that’s not workers’ comp unless it was a lunch meeting for your company. Aside from that, all injuries are covered under a workers’ comp policy.
Call Risk Averse Insurance in Media, PA to discuss workers’ compensation coverage for your business.
Risk Averse Insurance is an independent insurance agency in Delaware County that specializes in providing high-quality insurance products at an affordable price.