Corporate insurance buyers procure Workers’ Compensation insurance (WC) to protect their workers and to meet state insurance requirements. Some may not know however that there are two distinct parts of most standard Workers’ Compensation contracts. This short blog entry aims to describe both of these parts.
Part A: Statutory
Part A satisfies state insurance requirements. It will fund employees’ medical bills, related expenses and lost wages in the case of a covered Workers’ Compensation loss. Payments are made normally based on predetermined schedules in the case of defined injuries. Expenses are paid accordingly as the adjuster calculates them.
Part B: Employers’ Liability
In the case of an employee injury and potential employer negligence, Part B will respond to pay additional damages. These payments are normally litigated and are triggered by a serious injury proven to be caused by employer negligence. For Instance, an employee notices a faulty or exposed wire on a production machine and notifies their employer. The employer (for whatever reason) does not fix the wire and the employee is electrocuted. Employers’ Liability would respond in the case of the employee (or their family) to pay a claim above and beyond the normal Part A Statutory amount and is normally brought by a lawsuit.
There are at least a couple of points to consider when reviewing your Workers’ Compensation coverage. Make sure that Part B Employers’ Liability is appropriately scheduled on your corporate umbrella. As mentioned earlier, employer negligence claims can be large, thus the umbrella policy can sit on top of a normal $1,000,000 primary limit. Additionally, if your business resides in a monopolistic state like Ohio (WC provided by the state), you will need to buy the Employers’ Liability normally from your general liability provider as an endorsement.
Has your agent explained some of these nuances to you?
Feel free to contact me if you have any questions regarding this blog.
Joe Buick, Vice President
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