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Workers Compensation Insurance - A Brief History
By Randy Sieberg, CIC, ARM, CRM

Workers Compensation is insurance that provides medical and indeminity (disability) benefits for work-related injuries and diseases. For many employers this insurance is an experience rated system that encourages injury prevention by charging higher premiums to those employers whose workers have more injuries.

Workers compensation is mandatory in most regions through out the United States including Missouri, Illinois, Florida, Georgia, California, and others, it is not mandatory in Texas. Generally workers compensation insurance is purchased through independent insurance companies however in the monopolistic states of Montana, Wyoming, etc etc etc it must be secured through the state run workers compensation system.

Workers Compensation is a social insurance system falling under state regulations that gives partial wage replacement for temporary or permanent loss of earnings for job-related injuries and illnesses.

It started in the 1800's in Germany and spread throughout the United States in the 1930's and 1940's. Workers compensation provides workers with the knowledge that on the job injuries are taken care of without the need to sue their employers. Prior to the enactment of workers compensation statutes the only recourse for injured employees was to bring suit against their employers. With the advent of workers compensation and it's sole remedy for injuries protection the worker is now guaranteed that injuries will be taken care of to the extent of their states statutes.

Depending on the region in which it is being sought, the state laws will vary. For example the states of Missouri and Illinois will have different laws and requirements as they relate to workers compensation. As a business owner you should always consult with your insurance agent for the most up to date information regarding workers compensation requirements.

The pricing for workers compensation is based on rates per 100 of payroll and depend on the job classification an employee is included within. Throughout the years different premium modification factors have been devised to help offset the cost for an employer depending on the specific employers loss history, premium size and type of work.

Workers compensation's sole purpose is to cover the medical expenses accumulated by the injury, as well as financially support of the employee while they are recovering. As an incentive to encourage businesses to accept full responsibility for the premium costs of workers compensation, the workers gave up the right to sue the employer for damages resulting from a job related injury. Many seem to think workers compensation should be treated as an employee benefit. However rather than a benefit, workers compensation is a legally mandated right of the worker. As a mandated right all medical bills and loss wages relating to an on-the-job injury are covered by the workers compensation coverage.

This article is brought to you by WorkCompConsultants.com, an independent workers compensation consulting firm dedicated to helping employers prevent and resolve work comp issues.