There are businesses out there that have no employees. But majority of the businesses we know are employee-hiring companies, whether big or small. It’s exciting to have people with appropriate and reliable skills to co-labor with us in our business. Yet it can be overwhelming and intimidating for first-time employers in some ways, especially when it comes to the demands of the employees about security and compensation in the workplace.
So how should the small and starting business owners protect both their trusted employees and the business assets altogether? There are different types of insurance that a specific business needs, it depends on the kinds of hazards that may happen in that particular kind of work. Here’s a quick read about understanding the difference between Workers’ Compensation and Employers’ Liability insurance, the most common coverage for employee-hiring businesses.
So, What Is A Workers’ Compensation?
Workers’ Compensation, formerly known as workman’s compensation and in other terms simply called workers’ comp, is an insurance for all employees in the United States required by law. By the power of the federal authority given to every state’s Workers’ Compensation Act, all employers are obligated to provide their employees with this coverage. It protects almost all types of employee in different industries, from small to huge companies. If the employer charges his or her employees for the Workers’ Compensation coverage, that is illegal, and the employees can sue them for that. Also, if their business does not carry a Workers’ Compensation but have hired men to work, that is also an act punishable by law.
Employees benefit from it in many ways such as medical coverage for any workplace injury or sickness, even the sickness that may occur some time after the actual accident. Also, this compensation covers the financial loss that will arise when they are unable to come to work because they are still recovering or healing from the untoward incident at work that caused them to become inactive. In some ways, Workers’ Compensation also covers the lost wages due to the employee’s disability, partial or temporary.
But how does Workers’ Comp work for the employers?
Now, What Is An Employers’ Liability Insurance?
Employers’ Liability insurance is a component of a Workers’ Compensation. While Workers’ Compensation and Employers’ Liability actually both covers work-related injuries and illnesses, Employers’ Liability actually covers more. Business owners must understand that Workers’ Compensation only pays for accidents that occurs within the boundary of the workplace or any unexpected instances that can happen to the employee while performing his or her task at work. Any accident outside of work is no longer covered.
The good thing about Employers’ Liability is that it has a wider range of claims. There is a lot, but here are just the four major claims that this insurance covers.
Third Party Over Actions
A Third Party Over Action is an act where the injured employee gets claims from the Workers’ Compensation provided by his or her employer, and at the same time sues the third-party provider who caused or contributed to his o her injury. But because there is a contractual relationship between the employer and the third-party provider, the liability will be charged to the employer.
Loss of Consortium
A loss of consortium is a claim brought by the employee’s spouse or family member for loss of the services of the relative who was injured or killed in the incident. Because of the employer’s negligence, that employee can no longer extend the same affection, comfort, or companionship that he or she used to give his or her family prior to the accident. Usually, this claim can only be approved if the injured employee dies or suffers from a severe, long-lasting, or permanent injury.
A Dual Capacity is a claim filed by the employee against not only to the employer but also to the business itself. This type of legal action applies if the business product or service is the cause of the employee’s accident or illness.
Consequential Bodily Injury
A Consequential Bodily Injury suit is a claim filed by the spouse or relative of the employee who develops health problems from taking care of the injured employee or taking two jobs in order to make up for the financial loss because the other person cannot work.
Workers’ Compensation and Employers’ Liability insurance go hand in hand. When you buy a Workers’ Comp, a certain limit of Employers’ Liability is already inclusive. This is to better protect you, your business and your employees in whatever that may take place in the workspace.
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