Hassle-Free Health Coverage: Policy Components
When the first workers' compensation laws were passed, there were no insurance companies providing workers' comp coverage. Companies paid benefits out of operating funds.
Today, many property and casualty insurance companies offer workers' comp insurance, while some companies specialize only in workers' compensation insurance.
Six states have passed laws requiring that any workers' comp insurance purchased in that state must be purchased from a fund set up by the state and not from a private insurance company. When such arrangements exist, they are called "monopolistic state funds" or "exclusive funds." The six states are Nevada, North Dakota, Ohio, Washington, West Virginia and Wyoming.
In other states, there is no state workers' compensation fund --insurance must be purchased from private insurance companies. And in some states, both a state fund and private insurance companies compete for business from employers.
Insurers are not obligated to use any particular workers' comp policy form, and some variations may be found in the contract actually being issued. However, the National Council on Compensation Insurance has developed a standard policy and it is followed with a degree of uniformity.
The standard policy provides a complete package of protection for an employer's obligations under workers' comp law and liability which is outside that law. Endorsements may be used to cover exposures which are not insured by the basic policy.
In its current form, the policy has eight parts:
- Information page (or Declarations page)
- General section
- Part I -- Workers' compensation
- Part II -- Employers' liability
- Part III -- Other states insurance
- Part IV -- Duties if injury occurs
- Part V -- Premium
- Part VI -- Conditions
The policy includes two coverage parts. Part I, workers' comp, protects the policyholder against statutory claims. Part II, employers' liability, protects against common law claims. Some common provisions are repeated in each section.
Under each coverage, the insurance applies to accidental bodily injury, death or disease, occurring during the policy period and caused or aggravated by the conditions of employment by the insured.
In short, workers' comp is first-dollar coverage. You don't have to worry about deductibles or coinsurance. You don't have to worry about limits to coverage, etc. If you are injured at work, you will be covered for whatever medical care you need to get better. The only issues that will impact your treatment are related to seeing the doctor that your employer suggests (and even those are limited).
Supplementary payments are also provided, including coverage for appeal bonds, bonds to release attachments, interest on judgments, claim expenses, litigation costs taxed against the employer and certain other expenses (other than loss of earnings) incurred at the insurance company's request.
Under workers' comp, your employer has subrogation rights if anyone other than you is liable for a covered injury. Subrogation is designed to prevent a company from collecting twice for the same loss. It only applies when a third party caused the loss or was primarily responsible for it through negligence.
If any other insurance applies, the insurance company will only pay its share of claims and costs -- subject to any limits of liability, all shares will be equal until a loss is paid. (Note: in contrast to most other forms of commercial casualty insurance, workers' compensation and employers' liability coverage contribute equal shares when other insurance applies. Most other coverages contribute proportionally based upon the respective limits of insurance.)
