Worker's Compensation Insurance for Construction Workers

A worker's compensation insurance is construction insurance that helps to cover medical expenses or lost wages when the employee is injured or sick. This insurance can cover rehabilitation services and death benefits also. Worker's compensation insurance is also called workman's compensation or workman's comp. 

Photo by Dean Bennett

The details on what is worker's compensation insurance, its importance, premium cost factors, etc are explained in this article.

What is Worker's Compensation?

Worker's compensation insurance is a way of protecting both the employer and the employee of a construction business when workplace incidents happen.

The USA country law recommends all companies to have worker's comp, but it is very vital for construction industries. The construction industry is the most dangerous and risky sector in the world, where the function of worker's comp is beneficial.

Workers' compensation programs were established by state statute or within state constitutions beginning in 1911.
Today, each of the 50 states and the District of Columbia has its own worker's compensation program
With the exceptions of Texas and Wyoming, workers' compensation insurance coverage is mandatory in all states

Who Pays for Worker's Compensation Insurance?

The employers of the workers are supposed to pay for the worker's compensation coverage. The employee does not contribute to the fund. 

The insured money is obtained by the worker only if he confirms that the injury or illness caused to the worker is due to the current work-related. If the insurer or the employer rejects the claim by the worker, the case goes to a lawsuit for the law to decide.

A worker's compensation insurance also helps to compensate a family whose member has faced a work-related death. 

The time period insured for a worker's comp is dependent on the state limit. It can be anywhere between three to seven years. Some states stop worker's compensation when the employer turns 65.

Worker's compensation payments and benefits aren’t taxable.

Coverage of Workers Compensation Insurance

Most worker's compensation insurance covers:

1. Medical expenses
2. Lost wages - due to work-related illness or injury
3. Disability benefits: work injury cause partial or permanent disability
4. Ongoing care costs
5. Death benefits

What is not Covered by Workers' Compensation Insurance?

1. Commuting: Traveling to and from work is typically excluded from workers comp coverage. A person may be covered if they’re in a company vehicle or don’t have a physical office, such as a traveling salesperson.
2. Intoxication or substance abuse: Many states exclude workers' compensation coverage if the injured person was intoxicated and that contributed to the injury.
3. Workplace fight: If an injury happens during a fight with a colleague, workers' compensation may not cover the injuries. One exception is if the fight was about work.

Source: Forbes Advisor

Benefits and Functions of Worker's Compensation in the Construction Industry

1. Protect the Construction Business from financial hardship: If the company does not own a worker comp, things will go fine if no issues arise. If an unfortunate accident happens with the worker, a worker's comp can pay the wages and medical bills incurred. If not, the company would face a big amount for the issue along with fines related to not having mandatory insurance.
2. Saves the reputation of the business when unexpected accidents occur: Construction accidents are common on the local news about the construction site, and we do not hear that much as they are handled by the company's worker's comp and do not come out as a big story. This helps to keep the reputation intact. Not having insurance, invites lawsuits, making it local news and a bitter image of the company.

Factors Affecting Cost of Worker's Compensation Insurance

Workers comp insurance costs an average of $1 for every $100 in payroll, according to The Hartford. This average varies considerably by state.

The factors that influence worker's comp are dependent on the rate of risk involved in the projects taken by the company. Higher the risk, the higher the insurance. Some of the factors that influence the cost of worker's compensation insurance are:

1. The extent of working with heavy equipment
2. The working heights involved in the projects
3. The specific type of work and the risk associated with it. 

If the work is major electrical work taken care of by a few electricians, the list of electricians involved is submitted before applying for the insurance. As dealing with electricity does have risks associated, the insurance amount is high. 

Worker's comp can be purchased from a private insurance company or purchase it from a state-run agency—or you might have both options.

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