Imagine walking into work and seeing one of your worst nightmares unfolding in front of your eyes: one of your employees is injured, and it looks serious. As the business owner, you spring into action, ensuring that an ambulance has been called and that all other employees are safe. After the chaos dies down, you’re left to wonder—what happens next?
To prepare for such scenarios, employers should learn more about the workers comp settlement process and the specific provisions of their workers’ comp insurance policy.
Breaking Down Workers’ Comp Coverage
This form of insurance is required for businesses in every U.S. state besides Texas. Depending on where your company operates, you may have the option to purchase a policy from a private insurance provider. Some states, however, require companies to invest in coverage from a state fund.
When workplace incidents occur, workers’ comp covers the following:
- Medical expenses related to a workplace injury or illness
- A portion of the wages lost by the employee due to their injury and recovery time
- Compensation for any permanent injuries
- The cost of retraining
- In the case of a workplace fatality, benefits to their survivors
- Some policies may also cover the employer’s legal fees or a portion of settlement should the employee reject the workers’ comp compensation package.
After a workplace injury occurs and the injured employee has received care, the compensation process begins:
Step 1: The Employee Files a Claim
If an onsite or work-related accident results in an injury, the injured employee must report it to their employer.
Once the employer is informed about the injury or illness, the employee has suffered, they will issue the appropriate forms. The paperwork includes forms that will be issued to the company’s insurance provider and the state’s compensation board. The documents also include information about the employee’s rights and the benefits the compensation provides.
Under what circumstances can an employee file a claim? For a worker to claim compensation under this coverage, the following criteria must be met:
- The worker in question is an employee of the company, not a hired contractor.
- The injury or illness in question was suffered while on duty. The activity taking place when the injury occurred must be clearly within the scope of their work-related tasks. These can be activities that were being done offsite.
- The employer must have a workers’ comp policy.
Step 2: The Insurance Provider Responds
Once the paperwork is completed, the forms, along with a medical report from the employee’s doctor, are sent to the insurance provider. Based on the information provided, the insurer will decide whether to honor the claim or deny it. If a claim is denied, the employee can pursue an appeal.
Each state has a different policy for how workers’ comp benefits are calculated. In general, the compensation packages include payment for:
- Temporary total disability
- Temporary partial disability
- Permanent disability
- Reimbursement of medical expenses
Step 3: The Employee Accepts or Rejects the Insurance Offer
In most cases, the injured employee will accept the compensation package offered by the insurance provider. However, if an employee feels that the compensation is inadequate, they have the right to pursue a settlement from the employer. Their options include:
- Accepting the compensation offer as-is
- Negotiating a more substantial structured compensation- If the employee feels the value of the compensation package offered will not adequately cover their medical care or their loss of income, they can attempt to negotiate a payment plan with the employer.
- Negotiating a lump sum payoff- The employee can choose to pursue a one-off settlement with the employer. This lump sum would include an estimation of total medical expenses and disability payments.
If the two parties formally agree on a deal, the case is closed and cannot be revisited.
Protection for You, and Your Employees
Workplace injuries are unfortunate and difficult to deal with; however, they are not uncommon. While you may not want to think of this reality, as an employer, it’s your responsibility to prevent workplace injury, provide workers’ comp coverage, and to respond appropriately should an accident occur.
Fortunately, workers’ compensation insurance provides a clear path forward when injuries happen. The design of workers’ comp coverage is twofold: it protects employees by guaranteeing compensation and care, and it protects employers from financial ruin should a costly accident arise.
To secure the well-being of your business and employees, be sure to regularly review your workers’ comp policy and consider an upgrade.