How does Workers’ Compensation Insurance Work?
Picture this scenario: You’re at a construction site and a worker falls off the roof and falls and breaks their leg onto floor tiles, also breaking the tiles. What would be covered in that situation, the leg or the tiles?
What is Workers’ Compensation Insurance?
Workers’ compensation insurance are policies that provide medical benefits and wage compensation to workers injured on the job, in exchange for eliminating their right to file a lawsuit against their employer’s negligence.
Workers’ compensation benefits are designed to help employees if they are unable to work, cover medical expenses, as well as other expenses and rehabilitation costs associated with disability or illness. As you look to explore workers’ compensation options, it’s important to look for one that provides adequate coverage and compensation for your employees.
When you invest in a properly designed policy, it ensures you and your employees remain financially secure. It’s also important to look at the specific benefits that are offered within your policy. Typical workers’ compensation insurance policies cover medical benefits.
So, the worker’s comp covers the worker’s injury for falling off the roof.
What is Covered with Workers’ Compensation Insurance?
Specific workers’ compensation laws vary depending on your state; however, the most common compensation states that require workplace injury insurance include the following:
- Payment for lost wages
- Vocational rehabilitation
- Permanent disability
- Temporary disability
- Medical costs and treatment
One helpful way to understand this scenario is knowing the difference between performance and payment bonds.
In simple terms, a payment bond enforces that everything must be paid once a project is completed. Payment bonds are also surety bonds and are required for most state projects based on the Miller Act.
The Miller Act was passed by the U.S. General Services Administration Public Buildings Service (GSA) with the intention to explain how payment bonds protect subcontractors and suppliers.
The GSA responds to any reports of nonpayment, following the legal action needed and protected by the Miller Act. The GSA states that “the Miller Act requires that prime contractors for the construction, alteration, or repair of Federal buildings furnish a payment bond for contracts in excess of $100,000.”
Payment bonds additionally play a major role in construction. As an insurance company, we have relationships with carriers who understand the specifics of construction risk and can provide better solutions, better prices, and more comprehensive coverage—even for hard-to-place and high-risk companies.
The main differentiator between payment and performance bonds is that a performance bond ensures the employer is satisfied with the job. While both are surety bonds, performance bonds can be helpful in industries apart from construction.
A performance bond, according to Investopedia, “ensures the completion of a project. Setting these two together provides the proper incentives for laborers to provide a quality finish for the client.”
Any type of bonding will cover e tiles or building materials that were broken.
If an employee falls off the roof and hurts their leg and breaks the tile, the Workers comp covers the worker’s injury for falling off the roof. Bonding covers the broken tiles from his attempt not to fall off the roof.
The first step is to show us under the hood so we can help you find the right carrier and coverage to protect your business today and always.
Read about Worker’s Compensation for Independent Contractors here.