6 Common Misconceptions About Workers Compensation Insurance
By Pekin Insurance · Apr 19, 2019 ·3 min read
As a business owner, you don’t like Workers Compensation commercials unless you’re the lawyer paying for them. These advertisements start with an injured worker expressing worries about getting hurt on the job. Then, a lawyer cuts in and vows to fight for more money in a settlement.
“Isn’t Workers Compensation supposed to prevent lawsuits?” you think. Read on to learn the ins and outs of this essential coverage as we address 6 common misconceptions about Workers Compensation.
What Workers Compensation Insurance Does
In the event of a work-related illness, injury, or death, Workers Compensation typically covers the following expenses for employees:
- Medical bills
- Lost wages
- Funeral costs
Workers Compensation can only be claimed when the employee or surviving dependents release the employer from all legal claims. In this way, Workers Compensation acts like a settlement that clears the employer of wrongdoing and offers financial aid to the employee or dependents.
Though that explanation seems simple enough, the following are Workers Compensation misconceptions to give you a clearer idea of how this coverage works.
Misconception 1: "I'm not required to have Workers Compensation."
Some states require you to carry Workers Compensation coverage if you have more than one employee, while others push that limit up to four employees. Some states have exemptions for the following types of workers:
- Seasonal workers
- Leased or loaned employees
- Farmers and agricultural workers
- Domestic workers like housekeepers and caregivers
Mandatory coverage amounts vary, too. Figure out your requirements by checking your state’s laws and working with an insurance agent.
Misconception 2: Workers Compensation Only Applies to “High Risk” Jobs
Don’t ignore Workers Compensation just because you’re not in the construction industry. Even when your employees work in cubicles, you have to account for the following conditions that cause slips, trips, and falls:
- Slick surfaces
- Uneven or cracking sidewalks
- Potholes in the parking lot
- Spills and other messes
According to the National Safety Council, there were over 239,000 falls in 2016 (the most recent year with available data) spread across multiple industries, including retail, government, education, transportation, and more.
Misconception 3: Workers Compensation Only Covers Catastrophic Injuries
You might think Workers Compensation only covers severe injuries like broken bones, muscle tears, and sprains. However, Workers Compensation also covers:
- Chronic injuries that form over time
- Illnesses that develop as a result of the work environment
- Psychological or emotional damages (depending on the state)
Misconception 4: Workers Compensation Covers All Injuries
We realize this is the exact opposite of Misconception 3, but employees aren’t automatically eligible for Workers Compensation when they're hurt on the job. Those rights may be denied if the employee is injured:
- From self-inflicted wounds on the job or as a result of a fight they started.
- While committing a crime.
- While not "on the job" or not engaging in work-related activities.
- While violating a company policy.
- As a result of intoxication or drug use.
Misconception 5: Workers Compensation Only Applies to Company Property
Workers Compensation applies to both on- and off-the-job locations, like when an employee:
- Gets injured in a car accident on a business trip.
- Suffers an injury on the way to pick up take-out food for the office.
- Falls down the stairs at a business social event (unless alcohol played a role in the accident).
Don’t forget to cover employees who work from home. In a Pennsylvania Workers Compensation case, the court ruled in favor of a remote worker who hurt her neck after falling down the stairs.
Misconception 6: "My Employees Would Never Sue Me"
Think back to that workers compensation commercial we described earlier in this blog post. Some business owners roll their eyes at advertisements like that and think, “Well, it’ll never happen to me.” Until it does. Here’s a scenario to show you how a civil suit could’ve been prevented with Workers Compensation.
Violet is the accounting manager at an IT consulting firm. She’s known the owner, Rob, for 10 years. They consider each other friends.
On a normal weekday, Violet heads to work. She arrives at the firm, and her foot slips into a pothole as she steps out of her car. Violet lunges forward. When she reaches out to break her fall, her right wrist snaps up at an awkward angle. Her head bounces off the open car door, and she can’t stand up.
Thankfully, a coworker sees the accident and calls an ambulance. After Violet gets to the hospital, an x-ray reveals a clear break in her wrist. The doctor also diagnoses Violet with a concussion and insists that she take time away from work to heal.
When Violet calls Rob and tells him about the injuries, he sounds nervous. He says the business doesn’t carry Workers Compensation, so he expects Violet to cover the medical bills through her health insurance or with her own funds.
Think about this situation from Violet’s perspective. Do you think she’s happy to hear her boss and “friend” tell her she’s on the hook for these bills? Can you blame Violet for letting a court decide this matter? This scenario ends with Violet successfully suing the IT firm and Rob receiving a stiff fine for not carrying Workers Compensation.