What Is Workers Compensation Insurance?

All jobs have their pros and cons. But at least employees are assured of income in exchange for services, and at least some compensation for any injury or illnesses that might befall them on the job. This "job risk coverage", more commonly known as workers compensation is now provided to employees at all levels at a wide variety of jobs.

Designed in its modern form to fairly protect both employees and employers, it may seem a little bloated to both parties at times in its transactions. But can the workplace be without it?

Exactly what is workers compensation insurance? The concept of "workers compensation" (in ancient times, often for body parts lost in accidents) goes back thousands of years. In the United States, the ancestor of today's workers compensation benefits emerged in the 1850s. And then as now, those rules adopted to protect employees injured or made ill as a direct result of work seemed both straightforward and fair. In exchange for financial support as the employee tried to recover, the employer would not be sued.

For many years in the United States, the concept of workers compensation benefits was both controversial and voluntary. Many employers felt that such a concept denied employers the right to contest employees' claims of financial support due to workplace mishaps. Years of spotty coverage and gridlock ensued. Finally, a landmark case involving a railroad company heard by the Supreme Court in the early 20th century radically changed this. In this case's aftermath, many states adopted mandatory workers compensation laws. But this state-mandated workers compensation insurance can vary greatly by a state in terms of:

- the circumstances under which an employee is covered
- the degree of compensation that must be offered
- the duration of compensation that must be offered

There are also completely different workers compensation rules affecting employees or contract employees for the Federal government. In other words, the rules of workers compensation can be very confusing for both employers and employees. Employees tend to believe that workers compensation regulation offers them greater protection and more benefits than it actually does. But in many cases, this workers compensation may only limit them to initial emergency room treatment, and even then, only under certain circumstances. Depending on state and Federal regulations, workers compensation insurance may or may not cover:

- follow up medical examinations
- ongoing therapy and/or medical treatment
- financial support if an employee is unable to work

Given how expensive even the most minor medical treatment is these days, an employer quite understandably doesn't want to spend a lot of money on coverage for catastrophes that may be more due to employee carelessness than any action on the part of the employer. But there are any number of reasons for an employer to make sure that an abundance of workers compensation insurance is in place. One reason is because of the recourses that this system allows employees who are not provided its maximum protection. One is litigation against an employer. Personal injury compensation lawyers have won millions of dollars for clients who were either denied compensation by employers, or who sued employers who lacked compensation coverage. While such successful suits are not the norm, given the financial losses for employers when these plaintiffs do prevail, it makes sense to pay for and offer a comprehensive workers compensation program instead.

While an accident can happen at any time, some jobs seem to be more risk prone than others. A librarian seems less likely to suffer on the job injuries than a rodeo clown, for example. And some occupations not only seem to carry inherent risk, but further studies have shown even more injurious possibilities than previously considered. In the airline industry, one would imagine insurance protection would be needed for protection against employee claims of injuries caused by accidents or hijackings. And indeed, while aircraft accident compensation claims are by far the highest within the industry, an increasing number of compensation claims are being filed for injury and stress at the hands of passengers, in addition to medical conditions caused by frequent and prolonged flying, such as deep vein thrombosis (DVT). While the possibility of airplane accidents should never be discounted, media attention aside, these remain a relatively rare occurrence, and employers should focus on making sure that there is sufficient coverage for "lower level" problems like stress, assault, and medical condition aggrievated by flying.

It would seem that patients are the ones in trouble if they have to visit a hospital. But hospital workers are another high risk group in terms of exposure to injury and illness, as many of these positions leave them vulnerable to slips, trips, falls, strains, physical assaults, and illness caused by exposure to communicable diseases and bodily fluids. And perennially in the top five for workplace injuries are construction workers. While the majority of these workplace injuries are caused by falls from heights, injuries from slips and trips, being struck by falling objects, and exposure to toxic chemicals and materials (like asbestos) are also common.

No one wants to come to work anticipating an accident, and despite stories, the vast number of employees have no desire to try "gaming the compensation system". But despite the expense of insurance, given human’s nature to find new and creative ways of accidentally hurting themselves and others, workers compensation insurance programs are essential to protect both employers and employees.