What are the Types of Workers' Compensation Insurance?

Workers' compensation insurance policy aims to provide workers the benefit if they come across work-related illness or injury. In any of such situations, the workers get the financial support by wage replacement and medical support by medical benefits type of works' compensation policy. While these benefits are provided to the employees when they require it the most and as per their needs there are different types of workers' compensation insurance policies available. There are four different types of workers' compensation plans provided by most of the insurance providers:

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Types of Workers' Compensation Insurance:

Wage Replacement

This type of workers compensation insurance has four sub-categories each of which depends on the effect and type of injury that has affected the ability of the worker to earn. 

  • Temporary Total Disability: The benefits of this type of workers' compensation are provided to those injured workers who temporarily are unable to work due to their injury during work. However, they will be able to resume their work after some time at their full capacity.
  • Temporary Partial Disability: The benefits of this type of workers' compensation policy is offered to the workers who have returned to work after their injury but are unable to work at their full capacity because of partial disability because of the injury.
  • Permanent Total Disability: The benefits of this type of workers' compensation policy is offered to those workers whose disability has resulted in their inability to return to work that can earn them a steady source of income.
  • Permanent Partial Disability: This means your employee can get back to work but will not be able to work at the same capacity at which he/she was working before.

If the disabled employee has to take some time away from work for recovering, then the workers' compensation insurance can help him/her to recover some of their income that is lost until he/she returns to work. However, if the employee has encountered permanent disability, then works' compensation insurance can provide disability advantages for a lifetime.

Vocational Rehabilitation

This type of workmen's compensation insurance is provided to the injured workers who need assistance while returning to their previous work. Under this, the cost of therapeutic and medical care is paid, which helps an injured worker to recover and cope with illness and injury. Some insurance providers also pay for the training and care necessary to get back the skills that a worker requires to get back to work.

A disabled employee can also get transferable analysis of skills. This can help them to find other roles for them when they can get to know new work and skills for working with their disability.

Medical Treatment

The insurance providers and employers are responsible for paying the cost of medical treatment for the injury or illness that is caused to a worker during work. This can include:

  • Doctor's appointment fees
  • Emergency room visit expenses of the doctor and nursing staff
  • Rehabilitation and therapy charges
  • Medications cost
  • Cost of recover equipment
  • Cost of surgery, if required

To help an employee or worker to recover from a severe illness or injury, he/she may need ongoing care. The costs of such issues are usually covered in a workers' compensation insurance, however, it may not provide coverage for some type of alternative care, like:

  • Acupuncture cost
  • Homeopathic treatment cost
  • Cost of naturopathy treatment

If an injury or illness that is related to work is causing some other medical problems to an employee, then workers' compensation insurance as well helps. For example, an employee got an injury in his ankle while unloading a truck of goods. This injury at the ankle caused him to limp and resultantly he was having back pain. Workers' Compensation Insurance can help to cover his treatment of back pain because it was because of his ankle injury.

Funeral and Death Services

If in an unfortunate event an employee loses his/her life due to work-related illness or injury, this type of workers' compensation policy can provide benefits to their beneficiaries and family. The benefits of this plan help them to cover the expenses of the funeral and lost income. Most of the coverage policies have a limit for such expenses. In most of these cases, the compensation is given to the dependents and immediate family members, such as:

  • Children
  • Elderly parents
  • Spouse

Who Can Purchase a Workers' Compensation Insurance Policy?

This policy can be purchased by an employer for covering his/her employees against any injury or illness caused because of an accident that arose during his/her employment.

All different types of commercial companies can get the workers' compensation insurance policy. Highly labor-intensive work like transportation, construction, and logistics carry a high amount of risk whereas IT companies, consulting firms can purchase a worker's compensation insurance policy that does not include much manual labor. This can also help them to cope up with the legal and contractual requirements of their organization.

Benefits of Purchasing a Workers' Compensation Insurance Policy

This type of insurance policy provides financial protection and medical benefits to the employees when they come across some injury or illness at the workplace.

Factors for Calculating the Premium of Works' Compensation Insurance Policy

Many factors play an important role in calculating the premium of Workers' Compensation Insurance policy:

  • Number of workers
  • Nature of industry
  • Wage/ salary of employees or workers
  • Classification of industry
  • Safety standards
  • Risk location
  • Previous claim experience

The amount of premium may change when you renew your workers' compensation insurance policy as per your claim history, the number of workers, the length of your project, etc.

Summing It Up!

Each type of workers' compensation insurance that is mentioned above assures that the workers who encountered injury at the workplace get the ability to earn. However, different workers' compensation insurance providers offer policies with different coverage. So, before finalizing any policy, it is suggested to read the terms and conditions of the policy.

Written By: PolicyBazaar - Updated: 04 August 2022