The fundamental concept of the workers compensation policy is that the employer is responsible for paying benefits to an employee injured on the job, whether or not either party was negligent. Although state laws vary substantially, the benefits granted by workers compensation are intended to be an employee’s exclusive remedy for claims against their employer in all states.
Unlike other types of insurance, the workers compensation system is based upon the concept of no-fault. This means that the important fact is that the workmans comp injury occurred. The workmans comp system does not seek to prove whose fault the injury was before paying benefits. From your insurance company’s standpoint, an injury or disease is covered if:
- the workmans comp injury is accidental from the injured persons view
- the workmans comp injury arises out of the individual’s employment
- the workmans comp injury arises in the course of the individual’s employment
Here’s how the workmans comp system works. The injured employee relinquishes the right to sue their employer for employment related injuries in return for a statutory imposed mechanism for providing specific scheduled benefits. Workers compensation coverage is governed entirely by state statute. The policy pays what the state statute prescribes. No policy limits apply to workers compensation, which makes the insurer assume the liability prescribed by the state in the statute. An exception is punitive damages that may be assessed against the employer. The absence of policy limits does not mean that benefits are unlimited. The type and extent of payable benefits depend on the nature and of the disability and provision of the state law that apply.