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  • WORKERS COMPENSATION INSURANCE

Workers Compensation

When an employee suffers a work related injury or illness, workers compensation insurance steps in to provide benefits based on the type of illness or injury sustained. Workers compensation is based on a no-fault system, which means that an injured employee does not need to prove that the injury or illness was someone else’s fault in order to receive workers compensation benefits for an on-the-job injury or illness. As a California employer you are required under California Labor Code Section 3700 to provide workers compensation benefits for your employees. You can purchase workers compensation insurance from a licensed insurance company or through the State Compensation Insurance Fund (SCIF). Employers may also have the option to self-insure. Your broker-agent can assist you with purchasing workers compensation insurance from a licensed insurance company and can assist you with information on SCIF and self-insurance.

SCIF is a state-operated entity that exists in order to transact workers compensation insurance on a non-profit basis. SCIF competes with private workers compensation insurance companies for business, and it also operates as the insurer of last resort if private insurance companies are not willing to offer workers compensation insurance. If you are interested in SCIF, you can contact SCIF directly. See the “Resources” section of this brochure for contact information.

To become self-insured, you must obtain a certificate from the California Department of Industrial Relations, Office of Self-Insurance Plans. Private employers have to post security as a condition of receiving a certificate of consent to self-insure. Self-insurance is only a viable option for very large, stable employers due to the large amounts of security required to be posted. For complete information on workers compensation self-insurance, contact the California Department of Industrial Relations, Office of Self-Insurance Plans. See the “Resources” section for contact information.

Coverage Sections

Workers compensation insurance is divided into two coverage sections. In workers compensation part one the insurance company agrees to promptly pay all benefits and compensation due to an injured worker by workers compensation laws of the states listed on the declarations page of the policy. In employers liability part two the employer is protected against situations where an employee can sue for injuries suffered under common law liability (i.e., consequential bodily injury, loss of consortium, dual capacity, or third party over actions). These types of injuries in the course of employment are not covered under workers compensation law and are therefore not compensable under the workers compensation part one.

Classification and Rating

Classification of workers compensation insurance is based upon the specific duties that your employees perform in the course of their employment with your company. These classifications are developed and assigned by the Workers Compensation Insurance Rating Bureau (WCIRB) in most cases. Your workers compensation insurance company when working with the WCIRB must use the classification codes the WCIRB provides when rating your specific policy. Insurance companies can develop and submit their own classification system to the CDI for approval, but this is uncommon. Each classification is assigned a specific rate by the insurance company, which helps determine the overall premium for your policy. The WCIRB also generates the experience modification that must be applied to your policy. The experience modification is calculated from loss information your insurance company is required to submit to the WCIRB on an annual basis. The WCIRB provides a policyholder ombudsman who is available to answer questions from employers on classification, experience modification, and rating issues. Please see the “Resources” section at the end of this brochure for contact information on the WCIRB and their policyholder ombudsman.

Claims

It is important to note that workers compensation claims do not come under the jurisdiction of the CDI. The California Department of Industrial Relations, Division of Workers Compensation can assist you with questions or concerns regarding workers compensation claims. You can contact the California Department of Industrial Relations by using the information provided in the “Resources” section of this brochure. Also, you should be able to discuss any general workers compensation claims issues with your broker-agent or discuss issues on a specific claim with the claim adjuster that has been assigned to the case by your insurance company.

What is Workers Compensation Insurance?

Businesses of all types and sizes are required to purchase insurance policies that agree to pay the workers compensation benefits on their behalf in the event of a serious workplace injury sustained by one of their employees. It is an extremely important type of commercial insurance because it protects the business owner and the rest of his or her business from the risk of lawsuits and other claims resulting from workplace injuries. When the injured party receives workers compensation benefits from the employer’s insurance policy, they relinquish their right to sue the employer for negligence.

As with any type of business insurance, there are different types of workers compensation policies to choose from, and minimum coverage requirements differ from one jurisdiction to the next. These are a few of the benefits that a workers comp policy should cover:

  • Benefits paid to dependants in cases of employee fatality
  • Compensation for past and future economic losses
  • Payments in place of lost wages
  • Coverage for medical and injury-related expenses

This comprehensive type of insurance includes elements of life insurance, disability insurance and medical insurance. If you don’t already have it, get a workers compensation insurance quote today, and protect your business from a myriad of financial risks.

A schedule of benefits to an employee for injury, disability, dismemberment, or death as a result of occupational hazard. The payments are a liability of an employer. Insurance agreeing to pay the Workers Compensation benefits required by law on behalf of the employer.