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?

Workers’ compensation insurance covers medical expense and lost wages. It will pay 100% of the employees’ medical costs for all work-related injuries. If an employee is seriously injured and is unable to return to work right away, the workers’ compensation policy will also pay this employee’s lost wages. Currently, in Pennsylvania the maximum weekly wage is set at $1,049; an employee will be paid 66% of their normal wage subject to a max amount of $1,049 per week.

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. Business owners are required to purchase workers’ compensation insurance in Pennsylvania only if they have an employee. Corporate officers, LLC members, and sole proprietors are exempt and do not count as employees.

Does a general liability policy include workers’ compensation coverage?

Absolutely not. A general liability policy specifically excludes workers’ compensation. The General Liability policy excludes coverage for a lot of things like workers’ compensation and auto liability. The reason it excludes these exposures is that they are better covered under a different policy 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?

“Additional insured” endorsements cannot be added to a worker’s compensation policy because workers’ compensation is primarily for the benefit of the insured’s employees, and a company cannot extend employees’ rights to someone who is not an employee. However, you can request a waiver of subrogation instead; a waiver of subrogation bars the injured employee’s workers’ compensation carrier from initiating a suit against another party.

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?

Correct. Your commute to and from work is not covered. If you were walking to your car after hours and you slipped, that would not be a workers’ comp issue. However, if you reported to work and your employer sent you to go pick up office supplies and you slipped and fell at that time, that’s workers comp since you’re going out on a work duty.

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?

Pennsylvania law requires employers to pay for medical costs and lost wages when employees sustain a work-related injury. The reason you purchase workers’ compensation insurance is so that you as the employer do not have to bear those costs. If you did not have a workers’ compensation policy, you would still be obligated to cover the injured employees’ medical bills and lost wages. In addition, you would most likely be fined by the Pennsylvania Department of Labor for violating PA workers compensation law.

How long does an employee have to report a claim in the event of an injury or illness in order to be compensated?

An employee injury is to be reported to the employer within 21 days; if not reported within 120 days from the date of injury or having knowledge of a work-related disease, no compensation is allowed except for cases involving progressive diseases.

Who is eligible for workers’ compensation benefits?

Everyone is eligible for workers’ compensation benefits in PA even though the law only requires employers to provide their employees with coverage. Corporate officers, LLC member, and sole proprietors can even cover themselves if they wish.

Are any employee injuries not covered?

All injuries are covered. There are no excluded injuries. Anything that happens while you’re working should be covered.

 

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.

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