What is workers compensation? Workers comp had its beginning in 1914 in New York and soon spread to all 50 states, the District of Columbia and Puerto Rico. Each state has its own particular statute that defines an employee’s rights to coverage and protection and employers are required to provide it – that is with the exception of Texas. Texas is the only state where an employer can opt out of workers comp coverage but should do so in a very specific way.
The sole purpose of workers compensation coverage is to protect employees for injury and diseases sustained while working for an employer. The workers comp policy is designed to pay specific benefits to employees if they sustain an injury on the job or contract a disease due to the nature of the job.
Most people don’t realize that a workers compensation policy is actually made up of two parts. Part One is called “workers compensation insurance” and Part Two is termed “employers liability insurance”.
Workers’ Compensation Insurance
Protection which provides benefits to employees for any injury or contracted disease arising out of and in the course of employment. All states have laws which require such protection for workers and prescribe the length and amount of such benefits provided.
Employers Liability Insurance
Coverage against the common law liability of an employer for injuries sustained by employees, as distinguished from liability imposed by a workers compensation law. This coverage is used predominantly by a third party related to the injured employee and who has sustained loss of income or services (Example: No longer able to care for the children when the uninjured spouse is away ) as a result of the injury. The uninjured spouse may choose to sue the employer for negligence in the workplace resulting in injury to their spouse. As in any liability case, negligence must be proved.