Workers’ Compensation and Occupational Accident Insurance can look similar to one another, but these two have definite distinctions. It doesn’t hurt if the starting business owners first study the pros and cons of an Occupational Accident Insurance and a Workers’ Compensation so they would know how they can benefit from it.
Let’s dig deep and check how each product works.
Workers’ Compensation vs. Occupational Accident Insurance
First, let’s talk about Occupational Accident Insurance or OAI. It is an insurance coverage that gives both the employer and employee a certain degree of protection for an on-the-job accident or illness. Employers can calculate the perceived risk in their workplace to get consideration in the OIA coverage amount they can have. In this type of insurance, the employers can decide the coverage limits, deductibles and disability coverage of the plan that covers the employees for medical charges and lost pay due to an occupational injury or illness.
Now let’s explore Workers’ Compensation insurance. Generally speaking, Workers’ Comp is an insurance administered by the state that compensates the medical charges and lost pay of the employees from a job-incurred injury, regardless of who is to blame. This indemnifies all kinds of medical expenses like doctor’s fee, laboratory tests, procedures, rehabilitations, and so on, even the instances that will require medical attention years after the injury.
In addition to the medical benefits and financial assistance to employees, Workers’ Compensation also pays for the legal expenses for employers charged of lawsuits.
Pros and Cons
This time let’s have a comparison of Workers’ Compensation and Occupational Accident plans, the pros and cons of each.
Pros of Workers’ Compensation
- Insurance guarantor and guaranty associations secures the coverage
- The employee holds the burden of proof to a job-related injury case
- All medical expenses and lost wages are compensated
- Reduces employer’s liability
- Employees cannot win lawsuit judgements for punitive damages or pain/suffering (except in some cases)
- The plans are simple
Cons of Workers’ Compensation
- More expensive than OAI plans
Pros of Occupational Accident
- Less expensive that a Workers’ Compensation plan
- Employers can has the freedom to limit the amount of the insurance plan
- Employers can include coverage for survivors benefits, temporary or permanent disability, or accidental death
Cons of Occupational Accident
- Limited benefits
- Employers bear the burden of proof in lawsuits because this insurance provides little or nothing for legal expenses
- Employers are responsible to pay the medical and lost wage costs that exceed the coverage limit
- The plans are more complex
- Increases the employer’s liability
- Employees can win judgements for pain/suffering and punitive damages at certain limits
Small and start-up business owners need to understand the financial risk that their business may face when unexpected events happen while the employees are at work. Employers are responsible to take action for any legal obligations to their employees that are not covered by a Occupational Accident policy. One can easily be blinded by the cheaper cost of an OAI, but what they do not see is that it has an enormous cost in terms of lawsuits.
Choose the right coverage, don’t expose your business to financial obligations that is beyond what your business can handle.
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