What Do My Workers Compensation Limits Mean? A lot of people are not 100% sure about each of the parts of their workers comp coverage and we get the question “What is workers compensation?” quite often at The Insurance Shop.
Many employer don’t understand that the limits on your workers compensation insurance policy provide coverage for a business against lawsuits arising from employment-related injuries or illnesses. For example, if an injured employee is not satisfied alone with medical and loss of wage benefits because they feel their employer purposefully put them in harm’s way on the job or were grossly negligent, and as a result they were injured, they may sue for punitive damages.
This is where Part II of a workers’ comp policy would kick and provide coverage.
Part II also covers non-medical or wage-related expenses incurred as a result of the injury. An example of this is expenses for making a home handicap accessible or expenses for having to afford childcare as a result of an injury. It is important to note that employers’ liability coverage is limited in coverage, unlike medical benefits or loss of wages.
This means a workers’ compensation policy will pay out whatever it takes to rehabilitate an injured employee; however, it will not pay out unlimited amounts of money on behalf of employers who were charged with gross negligence or knowingly placing their employees in harm’s way. Employers’ liability coverage in most states starts at $100,000 in coverage per each employee, $100,000 each accident and at $500,000 per policy limit for disease or occupational hazards. These limits are statutory or minimum limits that come with the purchase of a policy.
These coverage limits can be raised for a nominal additional premium percentage on most policies typically less than 2% of premium. Many businesses opt for increased employers’ liability limits for peace of mind or because many sub-contractor agreements and general contracts often require higher limits than statutory coverage.