Explain the basis behind workers compensation. What was the historical background that generated this line of insurance? How does workers compensation work in terms of coverage, rating and premium generation? Define the aspect of compensability and ‘contract’ between the employer and employee. What are the specific coverage components and what types of injuries does workers compensation cover? How does employers’ liability respond?
Workers’ compensation is a form of insurance which provides wages replacement and medical benefits to employees who get injured in the course of employment and otherwise in exchange of a mandatory abandonment of the employee’s right to sue the employer for the tort of negligence. In the USA, employers are strictly liable for workplace injury even when there is merely any negligence from the employer’s side. Worker’s compensation acts as an exclusive remedy which prevents an employee to sue the employer for any workplace injury considering tort or negligence (Minke, 2014).
Before 1911, the workers only have provision to use the generic tort law for getting a remedy for his injury. This was nowhere different from any person getting injured by anyone else due to negligence. The workmen were liable to prove the employer’s negligence. The employers used to have solid defense from the common law point of view because they used to defend by stating that the worker was also negligent, that the worker knew the assumed risk, and that the injury happened due to some other fellow workmen and not by the employer. At hat time, the decisions taken by the court used to be in favor of the employees and it caused a threat to the employers. Under their continued lobbying, the first Workmen’s Compensation Act of 1911 was adopted which resulted in a restricted liability of the employers and the Act limited the amount of money that a worker could recover. Thus, the workers were only entitled to certain wage loss benefits, the cost of medical treatment, certain disability payments, and payments for vocational rehabilitation retraining (Guyton, 1999).
Workers compensation insurance covers the cost of medical care and rehabilitation for workers injured on the job. Additionally, it compensates them for their lost wages and provides with death benefits for their dependents if they are killed in work-related accidents, including terrorist attacks. Workers compensation systems, however, vary from state to state. State statutes and court decisions control several aspects including the claims handling, the impairment evaluation, settlement of disputes, and the total benefit the injured workers receive and the strategies used to control costs (“Workers Compensation”, 2017).
Minke, A. (2014). Conducting transatlantic business (p. 38). [Place of publication not identified]: Independent Publisher.
Guyton, G. P. (1999). A Brief History of Workers’ Compensation. The Iowa Orthopaedic Journal, 19, 106–110.
Workers Compensation. (2017). III. Retrieved 15 August 2017, from http://www.iii.org/publications/insurance-handbook/liability-insurance-issues/workers-compensation